Stocks Subdued by Brexit, U.S. Stimulus Doubts

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World shares slipped on Friday as tricky Brexit negotiations and uncertainty over U.S. stimulus talks capped riskier bets even though COVID19 vaccines made progress, pushing sterling down and keeping the dollar weak.

European equities fell, with the broad Euro STOXX 600 down 1.1 and indexes in Paris and London losing 1.2 and 1 respectively.

The MSCI world equity index, which tracks shares in 50 countries, fell into the red.

U.S. stocks were mixed on Thursday as nearterm U.S. fiscal stimulus appeared unlikely. Democrat House Speaker Nancy Pelosi suggested wrangling over a spending package and coronavirus aid could drag on through Christmas.

Brexit also vexed investors after British Prime Minister Boris Johnson said on Thursday there was a strong possibility Britain and the European Union would fail to strike a trade deal.

Britain and the EU have set a deadline of Sunday to find an agreement, before Britains exit from the bloc on Jan. 1. The odds of a disorderly Brexit rose to 61 on Friday from 53 a day before, according to the Smarkets exchange.

Sterling lost 0.5, and was set to end five straight weeks of gains as currency traders weighed an expected hit to the British economy should the sides fail to agree a deal.

Investors are right to be worried, said Olivier Marciot, a portfolio manager at Unigestion. If there is no deal, there will be implications. There could be some sort of correction.

U.S. futures gauges fell 0.2.

Still, investors had bet on stronger…

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