LONDON (Reuters) – European shares struggled on Tuesday as worries over the coronavirus pandemic overshadowed Chinese trade data that pointed to a buoyant recovery, while the U.S. dollar edged away from a three-week low.

FILE PHOTO: The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, October 12, 2020. REUTERS/Staff/File photo

The Euro STOXX 600 fell 0.4% before trimming losses, with markets in Frankfurt, London and Paris mirroring its moves. It was last down 0.2%, on course to end three straight days of gains.

Keeping markets on edge, traders said, was news that Johnson & Johnson was pausing its COVID-19 vaccine candidate clinical trials because of an unexplained illness in a study participant.

Investors see the quick introduction of a vaccine as key to helping economies recover. J&J’s move comes after AstraZeneca paused late-stage trials of its experimental vaccine in September, also due to a participant’s unexplained illness.

The travel and leisure and autos sectors suffered, losing 1% and 0.3% respectively after heavier falls in early trading.

Wall Street was also set to lose ground. S&P 500 futures recovered most of their earlier losses to trade down 0.1%.

The risk-off mood contrasted with earlier resilience for Asian markets. They recovered losses after Chinese data showed exports rising 9.9% in September and imports swinging to a 13.2% gain versus a 2.1% drop in August.

The data, which suggests Chinese exporters are recovering from the pandemic’s damage to overseas orders, helped MSCI’s broadest index of Asia-Pacific shares outside Japan gain 0.2%.

Chinese blue-chip shares added 0.3% after dipping early in the day. Some investors, though, raised questions about how strong consumer demand would prove to be.

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“The question is not necessarily how China’s trade is doing per se, but how well will consumers spend on Christmas to give some sense of normalcy amid a period of great stress,” said Nordea Investments’ Sebastien Galy in a note.

Currency traders were also watching Chinese trade-related issues. Reports that Beijing has stopped taking shipments of Australian coal caused the Australian dollar to drop as much as 0.6% to $0.7165.

The MSCI world equity index, which tracks shares in nearly 50 countries, fell 0.1%.

Government bond yields in the euro zone held near recent troughs, with hefty supply failing to dent a market bolstered by expectations for further central bank easing.

Germany’s 10-year Bund yield touched -0.538%, its lowest in just over a week. Italian and Greek benchmark 10-year debt both hit record lows.


Investors increasingly expect Democratic candidate Joe Biden will win the U.S. presidential election next month. That would probably lead to a big stimulus package to help the coronavirus-battered U.S. economy.

“Biden effectively leading in the polls is removing some element of uncertainty,” said Jeremy Gatto, an investment manager at Unigestion in Geneva. “In investors’ minds, it’s not a question of if we get a stimulus, but when.”

Some expect a Biden win to undermine the U.S. dollar, since he’s pledged to raise corporate tax rates. But the dollar rose 0.2% against a basket of other currencies to 93.214, trying to extend a rebound from Friday’s near-three-week low of 92.997.

The Chinese yuan fell 0.1% to 6.7466 per dollar, after the central bank set a weaker-than-forecast midpoint, offsetting any boost from the trade data.

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Reporting by Tom Wilson; editing by Kirsten Donovan, Larry King

Via Reuters Finance