European stocks, dollar slide awaiting US stimulus

European stock markets slid and the dollar faltered Wednesday following a mixed performance in Asia, as investors continue to wait on a US stimulus package.

The pound was upbeat thanks to hopes that Britain and the European Union will still strike a post-Brexit trade deal despite renewed tensions.

Sterling won support also from a rise in UK inflation, while oil prices dropped by almost two percent.

"European equity markets are in the red... as traders are growing tired of the fact that US politicians have yet to strike a deal with respect to the stimulus package," noted David Madden, analyst at CMC Markets UK.

"The lack of a stimulus scheme combined with growing fears about the health crisis have hurt stocks."

After months of stuttering talks - and with a deadline approaching - Democrats and the White House said they were closing the gap on their stimulus proposals, with House Speaker Nancy Pelosi saying legislation was being drawn up.

Her comments fanned optimism for a much-needed spending boost for US households and businesses, as a fresh wave of coronavirus hits the country and threatens to trigger the reimposition of economically painful containment measures.

However, while Pelosi said she was hopeful a bill could be passed before the November 3 election, she warned it must go through legislative steps.

The White House has upped its offer by $80 billion to $1.88 trillion, which is still short of the Democrats' $2.2 trillion plan, but US President Donald Trump has said he is willing to go higher.

And if nothing is passed before the election, traders broadly expect a new package to be passed at some point, whoever wins next month.

With Joe Biden ahead in polls - while Democrats could possibly win both houses of Congress - there is speculation an even bigger deal could be pushed.

All three main Wall Street indices were substantially stronger on Tuesday, and most of Asia followed suit Wednesday.

Tokyo closed with a gain of 0.3%, while Hong Kong rose 0.8%.

Shares in Hong Kong airline group Cathay Pacific jumped more than two percent after announcing it would make huge job cuts and shut down one of its carriers.

Shanghai's main stocks index dipped after recent gains however.

Vaccine hopes

Elsewhere, coronavirus vaccine hopes were given a lift after US biotech firm Moderna said its jab could be given approval for emergency use as early as December.

Meanwhile a report said drugs giant AstraZeneca is expected to be allowed to restart trials in the US after they were suspended worldwide in September when a volunteer fell ill.

The firm has already revived tests in Britain and elsewhere after being given permission.

The news comes as the disease sees frightening new flare-ups across the United States and in Europe, where numerous countries have been forced to introduce targeted lockdowns that have fanned fears for business survival and warnings of a possible double-dip recession.

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