TOKYO: Asian shares slipped from eight-month highs on Wednesday as the International Monetary Fund lowered its global growth outlook and as tensions over tariffs between the United States and Europe escalated.
Although earnings forecasts have been pegged back recently, share markets have been propped up by hopes of a trade deal between Washington and Beijing and optimism that the Chinese economy may be bottoming out as policy support kicks in."The gap between the strength in global shares and sluggishness in the real economy has been widening," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
U.S. President Donald Trump threatened to impose tariffs on US$11 billion worth of European Union products, heightening tensions over a long-running transatlantic aircraft subsidy dispute. In a possible sign of investors' strong appetite for bonds, Saudi Aramco is set to raise US$12 billion with its first international bond issue after receiving more than US$100 billion in orders.
EU leaders are likely to grant British Prime Minister Theresa May a second delay to Brexit but they could demand she accepts a much longer extension as France pushed for conditions to limit Britain's ability to undermine the bloc.
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