Iran-US tension take edge off world stocks rally

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LONDON/SHANGHAI/NEW YORK
World stocks fell on Friday, as worries about a threatened U.S. military strike against Iran and a global trade conflict took the edge off a central bank-induced rally from earlier in the week. The New York Times said US President Donald Trump approved military strikes against Iran on Friday in retaliation for the downing of an unmanned surveillance drone, then pulled back from launching the attacks. Iranian officials told Reuters on Friday that Tehran had received a message from US President Donald Trump through Oman warning that a U.S. attack on Iran was imminent. Worries over possible military strikes persist, and the MSCI world equity index, which tracks shares in 47 countries, fell from a seven-week high, driven mostly by weakness in Asian stocks. A rally by European stocks also faded, though a pan-European index was higher on the day. Market risk hasn’t been switched off, it’s merely gone dim, said Stephen Innes, a managing partner at Vanguard Markets. “However, it does appear equity markets are tired and may be suffering from a bit of a hangover after partying it up to post FOMC. A Federal Reserve Open Market Committee meeting this week opened the door to rate cuts in the United States. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.15%. The index was still up nearly 4% on the week, during which it reached its highest level since May 8. The Shanghai Composite Index rose 0.5%, Australian stocks declined 0.6% and Japan’s Nikkei shed 0.8%. The promise of rate cuts from both the Federal Reserve and the European Central Bank has kept sentiment strong in stock markets. Wall Street rose to record highs overnight, with the S&P 500 gaining nearly a percent.— VoM

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