Stocks little changed on data, earnings; pound choppy

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NEW YORK (Oct 16): A gauge of world stock markets was little changed on Wednesday, on the heels of U.S. data that raised concerns about a slowing economy, while sterling was volatile as negotiations on a Brexit deal continued. 

On Wall Street, stocks edged lower after monthly retail sales data for September showed a decline for the first time in seven month, stoking concerns softness in the manufacturing sector was starting to affect the broader economy.

"The retail sales figures were pretty disappointing across the board," said Benjamin Jeffery, a rates strategist at BMO Capital Markets in New York.

Data later in the session showed business inventories were unexpectedly flat in August, which suggested inventory investment could also drag on third-quarter economic growth. 

Concerns about the trade dispute between the U.S. and China also weighed. The U.S. House of Representatives on Tuesday passed legislation related to pro-democracy protests in Hong Kong, prompting China to warn in response that bilateral relations would be damaged if the measures became law.

Losses were offset by a solid start to earnings season. Bank of America shares rose 2.42%, following its quarterly results. Earnings for S&P 500 companies are expected to show a decline of 3% for the quarter, according to Refinitiv data, down from 5.1% growth expected at the start of the year.

The Dow Jones Industrial Average fell 7.6 points or 0.03% to 27,017.2; the S&P 500 gained 0.45 points or 0.02% to 2,996.13; and the Nasdaq Composite dropped 8.37 points or 0.1% to 8,140.34.

Sterling was was volatile, as negotiators worked to clinch a last-minute deal for Britain's exit from the European Union before an EU summit on Thursday. European Council President Donald Tusk said on Wednesday that it should be known in seven or eight hours as to when Brexit could happen and in theory, a deal could be accepted on Thursday.

The pound had strengthened by over 5% over the past five sessions, as investors rushed to reprice the prospect of a last-minute Brexit deal before the Oct 31 deadline.    

Sterling was last at US$1.2796, up 0.08% on the day. 

The dollar index, tracking it against six major peers, fell 0.1%, with the euro up 0.15% to US$1.1047.   

European stocks were modestly lower, as they contended with the Brexit talks and the dawn of earnings season, holding within a tight range on the session. 

Companies listed on the STOXX 600 index are now expected to report a decline in third-quarter earnings of as much as 3.7%, worse than the 3% expected a week ago, according to Refinitiv data through Tuesday.
 
In commodities, oil lost ground on concerns demand could be hurt by a slower economy, along with forecasts of a further climb in U.S. inventories.

U.S. crude rose 1.04% to US$53.36 per barrel and Brent was last at US$59.24, up 0.85% on the day.

In emerging markets, Turkey's Halkbank saw its shares drop, after U.S. prosecutors charged the state-owned lender with taking part in a multibillion-dollar scheme to evade U.S. sanctions on Iran, which the company said were part of sanctions leveled against Ankara over its military operation in Syria.

Before Turkish markets opened, authorities banned short selling on seven large Turkish bank stocks, including Halkbank.

Selling shares in the banks only to buy them later in the session was also banned, authorities said.

Overall emerging market stocks rose 0.35%.