While the mood on trading floors is upbeat ahead of the China-US deal signing, investors are steeling for the next round of talks, which are expected to be the toughest

London (AFP) - Stock markets fell Wednesday as investors took a step back after weeks of gains and awaited the signing of a long-expected China-US trade deal.

European indices followed Asia lower, though London’s benchmark FTSE 100 was basically stable owing to a weaker pound which boosts share prices of the index’s multinationals whose earnings in are foreign currencies.

The pound dropped versus the euro as annual British inflation slumped to a three-year low of 1.3 percent in December, increasing the chances of a Bank of England interest-rate cut on the eve of the country’s exit from the European Union.

Meanwhile, other official data showed that German economic growth fell sharply in 2019.

Business activity in the European powerhouse expanded by just 0.6 percent last year, far less than an increase of 1.5 percent in 2018.

Oil prices drifted lower after a monthly OPEC report estimated that stronger growth in demand for crude this year would be more than offset by increased production by non-OPEC members.

“European stocks are mostly treading water while US futures are marginally lower following a lacklustre start to the week,” commented Craig Erlam, senior market analyst at OANDA Europe.

“We’ve been waiting for the (US-China) signing ceremony for so long but there is a worry that, despite details of the deal being largely concealed, what we are hearing is a little underwhelming and may be already priced in, maybe even too much.”

While the mood on trading floors was broadly upbeat as tensions between the economic superpowers eased, analysts warned there will not likely be much more progress on the next phase of talks ahead of the US presidential election in November.

Under terms of the mini pact, which eases a two-year standoff that has jolted the global economy, the White House is to cut in half tariffs imposed September 1 on $120 billion of Chinese goods and cancel a second round that had been set for December 15.

In return, Beijing has pledged vast sums to buy US products including pork and soybeans.

The next round of negotiations is expected to be the toughest, with key issues including China’s massive subsidies for state industry and forced technology transfer likely to prove key sticking points.

Officials said full details of the mini pact would be made public after the signing ceremony in Washington.

- Key figures at 1445 GMT -

London - FTSE 100: FLAT at 7,624.42 points

Frankfurt - DAX 30: DOWN 0.3 percent at 13,415.94

Paris - CAC 40: DOWN 0.3 percent at 6,021.19

EURO STOXX 50: DOWN 0.3 percent at 3,763.18

Tokyo - Nikkei 225: DOWN 0.5 percent at 23,916.58 (close)

Hong Kong - Hang Seng: DOWN 0.4 percent at 28,773.59 (close)

Shanghai - Composite: DOWN 0.5 percent at 3,090.04 (close)

New York - Dow: UP 0.2 percent at 29,002.94

Pound/dollar: UP at $1.3027 from $1.3019 at 2200 GMT

Euro/pound: UP at 85.65 pence from 85.48 pence

Euro/dollar: UP at $1.1156 from $1.1128

Dollar/yen: DOWN at 109.89 yen from 109.99

Brent Crude: DOWN 0.3 percent at $64.28 per barrel

West Texas Intermediate: DOWN 0.4 percent at $58.01 per barrel