Sterling Soars; Stocks and US Dollar Off on Geopolitical Angst

A panel displaying stock indices of Asian markets at Hong Kong Exchanges in Hong Kong

Asia stocks slip amid North Korea concerns, dollar up on Mnuchin comments

Sterling jumped as much as 1.6 percent against the dollar to hit its highest levels since mid-December, after British Prime Minister Theresa May surprised markets by calling for an early parliamentary election in June.

"The movements you have seen over the past couple of weeks has been just a slow loss of some confidence that this is headed in the direction it seemed to be right after the election".

The FTSE 100 fell 0.1 percent to 7,142.30 while France's CAC 40 rose 0.2 percent to 4,999.18 and Germany's DAX gained 0.2 percent to 12,025.24. All three major indexes .DJI .SPX .IXIC advanced about 0.9 percent overnight.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.6 percent to the lowest since mid-March.

Sterling was just off a six-month top against the dollar having surged when British Prime Minister Theresa May called an early general election for June 8, seeking to strengthen her party's majority ahead of Brexit negotiations.

"The way the market is reading it, it is viewed as something that creates a more stable political outlook for Brexit to happen, which in itself is viewed as a positive", said Alvise Marino, FX strategist at Credit Suisse in NY.

After the British pound took centre-stage on Tuesday with its second-largest one-day rise since 2008, the Australian dollar was the biggest mover on major currency markets on Wednesday, sliding 0.7% as iron ore prices took a dive.

Against its perceived safe-haven Japanese counterpart, the dollar was slightly higher on the day at 108.84 yen JPY= , pulling away from five-month lows touched on Monday.

The euro got extra support from the latest French election poll showing Macron leading ahead of the first round.

The dollar index, which tracks the USA currency against a basket of six major rivals, edged up 0.1 percent to 99.781 .DXY , moving away from a three-week low of 99.465 plumbed on Tuesday.

The dollar edged higher after U.S. Treasury Secretary said he saw the currency's strength over the long term as a positive, although he agreed with Trump's view that it hurts exports in the short term. Brent crude, used to price worldwide oils, rose 13 cents to $55.02 per barrel in London.

U.S. Vice President Mike Pence said on Wednesday that Washington would work with its allies and China to put economic and diplomatic pressure on North Korea after its failed missile test over the weekend.

Benchmark 10-year notes last rose 17/32 in price to yield 2.1912 percent, from 2.252 percent late on Monday.

Copper CMCU3 lost 2.11 percent to $5,572.00 a tonne.

Spot gold XAU= added 0.4 percent to $1,289.47 an ounce.

Despite these tensions, Wall Street posted its first session of gains in four, as investors turned their attention to first-quarter corporate earnings.

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