Asian, European stocks boosted by breakthrough Korea summit

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(iStock)
(iStock)

New York - Asian and European stock markets advanced on Friday with global investor sentiment boosted by a historic meeting of the leaders of North and South Korea.

However Wall Street treaded water as data showed that US economic growth slowed at the beginning of the year, although the annualised rate of 2.3% growth rate was better than many economists had feared. Earnings were mixed, with Amazon surging on better-than-expected earnings but ExxonMobil tumbling on disappointing earnings.

"European equity markets are higher ... after a strong finish in Asia," noted CMC Markets analyst David Madden.

"The historic meeting of the leaders of North and South Korea has given a boost to the geopolitical mood - which was been tepid recently."

In Asia, Seoul's Kospi shares index was among the best performers and the won strengthened as the leaders of North and South Korea held talks.

Kim Jong Un and Moon Jae-in have agreed to pursue a permanent peace and the complete denuclearization of the divided peninsula, as they embraced after a historic summit laden with symbolism.

It was the highest-level encounter yet in a whirlwind of nuclear diplomacy, and intended to pave the way for a much-anticipated encounter between Kim and US President Donald Trump.

But Kim did not mention denuclearisation and analysts warned that while the summit was a good first step, similar promises had been made before and much remained to be done to resolve the issue of the North's atomic arsenal.

"The positive atmosphere of the summit will lead to a period of relative calm on and around the Korean Peninsula in the short-term, which will be positive for South Korea equities and the won," said a note from Eurasia Group that said the odds of complete denuclearisation remained "poor."

"Nothing agreed to today locks North Korea into anything," the note said. "Nothing we have seen thus far leads us to believe that Kim Jong-un's calculations on the necessity of a credible nuclear capability to deter threats of his regime being attacked or overthrown have changed."

Pound plunges on slowdown

The pound meanwhile plunged Friday as news of Britain's sharp economic slowdown extinguished hopes of an interest rate hike next month.

Gross domestic product grew by just 0.1% in the first quarter or three months to March, from 0.4% in the preceding quarter, official data showed.

"Suddenly Britain's growth looks brittle and bruised," said David Lamb, head of dealing at FEXCO Corporate Payments.

"The Bank of England, which barely a month ago was hinting bullishly at a May interest rate rise, will now be very wary of doing anything that could jeopardize things further."

The news sent the pound tumbling to a session low of $1.3747, a level unseen since January. And the European single currency rose as high as 87.85 pence per euro.

London's FTSE 100 index jumped 1.1% as the pound weakness lifted share prices of London-listed multinationals that derive the lion's share of their earnings in dollars.

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