Aussie dollar falls as U.S., China delay trade meeting; sterling falls

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The pound rose on hopes of a delayed Brexit, a move which investors said could increase May's chances of getting her deal with the European Union through parliament or lead to Brexit being called off altogether if a second referendum is held.

Wall Street was buoyant overnight after USA producer prices barely edged higher in February, the latest sign that inflation remained tame and affirming expectations the Federal Reserve would maintain a "patient" approach to future tightening.

The pullback in sterling follows a big rally on Wednesday. UK lawmakers rejected the idea of tearing the country out of the European Union with no agreement and UK Prime Minister Theresa May was said to plan to ask for an extension to the March 29 Brexit deadline lasting about two months.

World equity markets advanced broadly on Wednesday after USA data again showed risk-friendly low inflation, which weakened the dollar, while Boeing shares gained even as the United States said it would ground the company's 737 MAX aircraft. The price of oil, one of Canada's major exports, rose as USA crude inventories unexpectedly fell and an official forecast of crude oil supply growth from the world's top producer was revised lower.

Next up comes a slew of China data including retail sales and industrial production that could provide clues on how the economy's reacting to stimulus.

China's National People's Congress is set to wrap up on Friday.Bank of Japan Governor Haruhiko Kuroda will speak on Friday, after he and his board conclude their discussions on monetary policy. The Stoxx Europe 600 slipped 0.1%.

MSCI's broadest index of Asia-Pacific shares outside Japan held at 522.06 points.

The MSCI Emerging Market Index declined 0.3 percent. It had fallen overnight, at one point brushing a nine-day trough of 96.385. Sterling rose 1.01 percent to $1.3205 while the dollar softened against the yen and euro. Britain still has the option, right up to 11pm on 29 March, to unilaterally withdraw from its intended departure triggered by its invocation of Article 50 of the Lisbon Treaty nearly two years ago.

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The dollar index, a gauge of its strength against six other major currencies, was up 0.2 percent at 96.769.

In afternoon trading, USA 10-year note yields rose to 2.612 percent from 2.605 percent late on Tuesday.

The yield on 10-year Treasuries gained one basis point to 2.63 percent.Germany's 10-year yield gained one basis point to 0.07 percent, the highest in more than a week.Britain's 10-year yield advanced three basis points to 1.227 percent, the highest in more than a week.The spread of Italy's 10-year bonds over Germany's decreased three basis points to 2.4582 percentage points.

The Bloomberg Commodity Index fell 0.2 percent.

United States crude rose $1.39 to settle at $58.26 per barrel and Brent settled up 88 cents at $67.55.

Gold futures slumped 1 percent to $1,296.40 an ounce.

-With assistance from Sophie Caronello, Cormac Mullen and Adam Haigh.

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