Stocks struggle

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SYDNEY- Asian stock markets struggled to make headway on Wednesday as Wall Street futures took a knock from earnings disappointment, and the dollar backtracked on the yen following a fall in Treasury yields.

Investors were also nonplussed by comments from President Donald Trump that the US would like to take over the war-ravaged Gaza Strip and develop it economically.

The suggestion came out of the blue and underlined the risk of more policy uncertainty and market volatility ahead.

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The mood was helped a little when Beijing set a firm fix for its yuan, countering concerns it might allow the currency to slide to offset the impact of tariffs on its exports.

China has so far made a relatively restrained response to Trump’s added 10 percent in tariffs, announcing levies that covered just $14 billion of US exports to China.

“The measures are fairly modest, at least relative to US moves, and have clearly been calibrated to try to send a message to the US without inflicting too much damage,” said Julian Evans-Pritchard, head of China economics at Capital Economics.

“The risk is that China’s retaliation proves too modest to exert any real pressure on the US to reverse tariffs, but sufficiently defiant to trigger a further escalation.”

A survey did show China’s services activity expanded at a slower pace in January, but analysts suspected much of that was due to the timing of the Lunar New Year holidays.

Chinese blue chips returned from holiday with a minor dip of 0.2 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.6 percent, and South Korea’s main index bounced 1.2 percent. Japan’s Nikkei.N225 went flat as the yen rose broadly along with local bond yields.

EUROSTOXX 50 futures fell 0.5 percent, while FTSE futures eased 0.2 percent and DAX futures 0.4 percent amid the lingering risk of US taxes on trade.

Having bounced on Tuesday, Wall Street futures ran into selling when Alphabet earnings missed forecasts as it ramped up spending on capex. Its shares dived 7.6 percent in extended trading, wiping $192 billion off its market capitalization.

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