World shares hit five-month high; European shares, dollar falter

LONDON (Reuters) – European shares fell after opening higher, following a mixed bag of earnings results, while the dollar’s rebound stalled as investors waited for progress in talks on government aid in the United States.
Strong U.S. manufacturing data boosted sentiment through the Asian session, even as Sino-U.S. relations took a turn for the worst.

An industry gauge released overnight indicated U.S. manufacturing activity expanded in July at the fastest pace in more than a year, although hiring remained subdued.

After a rally on Monday, European shares opened higher but then fell, with the pan-European STOXX 600 down 0.6% and London’s FTSE 100 down 0.7% .FTSE.

Disappointing earnings reports from the world’s largest spirits maker, Diageo Plc (DGE.L), and German drugs and pesticides group Bayer (BAYGn.DE) took the shine off growth-linked cyclical stocks.
Shares in BP jumped after it cut its dividend and posted a record loss that was in line with expectations.

The MSCI world equity index, which tracks shares in 49 countries, was up 0.4% after reaching a five-month high just after 0700 GMT. MSCI’s main European Index .MSER was flat on the day.

U.S.-China tensions worsened as President Donald Trump said that he will ban Chinese app TikTok in the U.S. unless a tech company such as Microsoft buys it.

The move provoked an outcry on Chinese social media and criticism from a prominent Chinese investor in TikTok’s owner, ByteDance.

“This kind of rhetoric lines up with our view that U.S.-China frictions may increase into the U.S. elections, injecting volatility into related assets like China tech ADRs (American Depository Receipts) while also supporting insurance assets like gold,” wrote UBS Global Wealth Management’s chief investment officer, Mark Haefele.