Sterling has been given a lift by hopes of progress in post-Brexit trade talks. ©AFP Justin TALLIS

London (AFP) – European stock markets steadied Thursday following sharp losses the previous session as the chances of a pre-election stimulus package in Washington dimmed.

Oil prices recovered, while the dollar was higher against main rivals.

“Traders are not cutting and running from equity markets because there is a view that some sort of a package will be agreed upon eventually,” said David Madden, analyst at CMC Markets UK.

“The US economy needs assistance but there isn’t much hope that it will be achieved soon.”

With the US presidential election less than two weeks away, investors are stepping back from putting any new bets on a deal despite recent optimism and Donald Trump’s call for the two sides to hammer out a massive rescue package.

The deadlock comes as the need for help for struggling Americans is laid bare by a surge in coronavirus cases across the US that observers fear could hammer the world’s top economy.

The White House has said it will agree to a $1.9-trillion package but that is $300 billion short of what Democrats have put forward and much more than many Republicans are willing to swallow.

Analysts said markets have been jolted also by US Director of National Intelligence John Ratcliffe’s accusation that Russia and Iran have meddled in the election run-up, sending “spoofed” emails to Americans “designed to intimidate voters, incite social unrest, and damage President Trump”.

The claims will likely lead to fresh concerns about the result being contested, which could drag on for weeks and cause uncertainty on markets.

– Pound retreats –

The pound gave up some of the strong gains won Wednesday against the dollar and euro on hopes of a post-Brexit tade deal between Britain and the European Union.

EU negotiators headed to London on Thursday to resume talks after Britain called off a boycott, with both sides vowing to work round the clock to seal a deal in the short time left.

Britain meanwhile on Thursday said it had agreed a provisional trade deal with Norway, Switzerland and two other non-EU partners to ensure continuity after its Brexit divorce from the European Union.

– Key figures around 1100 GMT –

London – FTSE 100: FLAT at 5,774.23 points

Frankfurt – DAX 30: FLAT at 12,555.15

Paris – CAC 40: UP 0.1 percent at 4,859.44

EURO STOXX 50: FLAT at 3,180.35

Tokyo – Nikkei 225: DOWN 0.7 percent at 23,474.27 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 24,786.13 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,312.50 (close)

New York – Dow Jones: DOWN 0.4 percent at 28,210.82 (close Wednesday)

Euro/dollar: DOWN at $1.1827 from $1.1857 at 2050 GMT

Dollar/yen: UP at 104.70 yen from 104.58 yen

Pound/dollar: DOWN at $1.3098 from $1.3145

Euro/pound: UP at 90.28 pence from 90.19 pence

West Texas Intermediate: UP 0.8 percent at $40.34 per barrel

Brent North Sea crude: UP 0.8 percent at $42.06 per barrel

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.