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European Stocks Climb on Swedish Vote Relief

European equities rose Monday as the far-right failed to make as large gains as expected in Swedish elections, with investors appearing more relieved about the dampening prospects of a "Swexit" than concerned about domestic political deadlock in the EU nation.

Stockholm's benchmark OMX 30 index of major companies added 0.4 percent in value, while the Swedish kronor steadied.

There were also similar gains for Frankfurt and Paris indices after the Swedish vote, which once again exposed simmering tensions over immigration in the European Union.

London stocks rose as official data revealed that the UK economy bounced back with 0.3-percent growth in July from the previous month, despite Brexit concerns.

"It’s been a slow start to the trading week, with political stories broadly dominating in Europe," said Oanda analyst Craig Erlam.

He added that there was a "now all-too-familiar ... surge in support for populists" in Sweden.

"The election... once again serves as a reminder to the EU that free movement may be fundamental to its ideals -- but it's also contributing to the rise of nationalist parties."

 - 'Swexit risk is low' -

As expected, neither the center-left nor the center-right bloc obtained a majority in Sweden's legislative vote.

That has left the nation's Social Democratic Prime Minister Stefan Lofven with the prospect of lengthy talks to form a new coalition administration.

The far-right Sweden Democrats meanwhile solidified their position as third-biggest party and kingmaker, albeit with a lower score than they had expected.

The vote has dented the prospect of a so-called "Swexit", or Swedish exit from the European Union, following Britain's shock 2016 Brexit referendum to leave the bloc.

"The risk of 'Swexit' is low," said Robert Bergqvist, chief economist at banking group SEB.

He added: "Sweden risks becoming a battering ram in an increasingly polarized international debate, and the ability of Swedish political leaders to manage the new challenges is likely to influence what path other countries will choose.

"The Swexit issue is also beginning to draw increasing international attention, especially in the UK, where people see parallels to Brexit."

In Asia meanwhile, Hong Kong and Shanghai led a broad sell-off across after Donald Trump threatened to impose tariffs on all Chinese imports, ramping up fears of an all-out trade war between the world's top two economies.

The president's comments Friday added to the uncertainty on trading floors, which have also been hit by concerns of a brewing financial crisis in emerging markets.

They also overshadowed data showing a bigger-than-forecast jump in U.S. jobs creation for August and sent all three main indexes on Wall Street into negative territory.

- Trump tariffs -

There was some relief earlier Friday that Trump did not immediately impose levies on $200 billion of Chinese goods after the passing of a deadline for public consultation.

The threatened tariffs would add to the $50 billion in imports already targeted and mark a major step up in the long-running battle between the world's top two economies.

However, Trump told reporters on Air Force One later that day that "there's another $267 billion ready to go on short notice if I want."

That would cover virtually all the goods the United States imports from China. Beijing has threatened to retaliate against any measures out of Washington.

- Key figures around 1130 GMT -

STOCKHOLM - OMX 30: UP 0.5 percent at 1,625.90 points

London - FTSE 100: UP 0.4 percent at 7,305.15

Frankfurt - DAX 30: UP 0.5 percent at 12,017.78

Paris - CAC 40: UP 0.6 percent at 5,281.34

EURO STOXX 50: UP 0.8 percent at 3,317.65

Tokyo - Nikkei 225: UP 0.3 percent at 22,373.09 (close)

Hong Kong - Hang Seng: DOWN 1.3 percent at 26,613.42 (close)

Shanghai - Composite: DOWN 1.2 percent at 2,669.48 (close)

New York - Dow: DOWN 0.3 percent at 25,916.54 (close)

Euro/dollar: UP at $1.1571 from $1.1553 at 2100 GMT

Pound/dollar: UP at $1.2941 from $1.2920

Dollar/yen: UP at 111.07 yen from 110.99 yen

Oil - Brent Crude: UP 52 cents at $77.35 per barrel

Oil - West Texas Intermediate: UP 40 cents at $68.15

Source: Agence France Presse


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