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Easing Political Fears in Europe Pound Surges, Global Stocks Rise

Britain’s pound jumped from three-year lows Wednesday after a parliamentary vote raised the prospect of another delay to Brexit while an easing of concerns about political risk in Italy further helped push world shares higher.

Global stocks surged 0.4% by 0821 GMT, as Europe returned 1.1% and after a good session in Asia following a report showing that development in China’s service sector stimulated despite broader economic headwinds.

Reports that Hong Kong will declare the withdrawal of an extradition bill that sparked months of protests, throwing the Chinese-dominated city into its worst crisis in a long time, also caused relief.

British legislators defeated Boris Johnson on Tuesday in a proposal to block him from taking Britain out of the European Union without a deal, prompting the PM to declare that he would immediately push for a snap election.

On Wednesday they will urge to approve a law forcing Borris Johnson to ask the European Union to postpone Brexit until Jan. 31 unless he has an exit deal accredited by parliament beforehand.

UK developments boosted the pound 0.56% to $1.2155 after skidding Tuesday to its lowest since October 2016.

The dollar index against a basket of six leading currencies was firm at 98.803 after rising overnight to 99.370, its highest level since May 2017.

The index lost ground on Tuesday after knowledge showed the U.S. manufacturing sector contracted in August for the first time since 2016, a reading that in turn has cemented expectations of further policy easing by the Federal Reserve.

The euro climbed to $1.0987 after slipping to a 28-month low of $1.0926 overnight as traders strengthened for a possible interest rate cut by the European Central Bank subsequent week.

Richard Alberty

By Richard Alberty

Richard is one of the state's well-known business journalist having decades of experience in business reporting. He brings that experience in FBI Market News and leads the US Market Column. Richard provides sharp and insightful analysis of the market to readers