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Gold holds above $4,000, European stock rally stops

On Thursday, the rally in European shares paused, as the FTSE 100 was dragged lower by banking stocks, and investors weighed the risks of a correction.

Wall Street reached new record highs during the previous session as investors bet gains in technology shares, despite a U.S. shutdown that left traders without key economic data.

Investors have been nervous about the U.S. government shutdown, political risks in Japan, and France this week. This has created a safe-haven market, which along with a weaker US dollar has pushed gold to $4,000 for first time.

STOXX Down 0.2% On The Day

At 1059 GMT, the STOXX 600 index was down by 0.2% and London's FTSE 100 also fell by 0.2%. Losses at HSBC Group and Lloyds Banking Group were partially offset by gains at mining and technology companies.

The MSCI World Equity Index rose just 0.1% for the day.

U.S. Stock Futures dropped, pointing towards a mixed opening for Wall Street.

Fiona Cincotta is the senior analyst for City Index.

"It feels like we are missing out on any substance in the moves that we see, because we don't get that data from the U.S."

JPMorgan Chase CEO Jamie Dimon, in a sign that investors are becoming more cautious, said that there is a greater risk of a major correction of the U.S. Stock Market within the next 6 months to 2 years. He cited factors such as geopolitical tensions and government spending, along with remilitarization across the globe.

Donald Trump, the U.S. president, announced late Wednesday night that Israel and Hamas reached an agreement on a ceasefire as well as a hostage release.

French bonds maintained their gains from Wednesday after President Emmanuel Macron announced that he will name a new premier by Friday evening. This raised hopes that a country-wide election could be avoided and a budget agreed.

The benchmark German 10-year bond yield is 2.679%, while the 10-year French government bonds yield is 3.4962%.

The dollar index rose 0.1%, but it was still down 8.9% for the entire year. The euro, which was down by 0.1% to $1.1612 on its fourth consecutive day, is in a downward trend.

Overnight, the Japanese yen fell to a record low of 153 yen per dollar. However, it was last slightly stronger at 152.75.

The economist who advised the policy circle for Japan's potential new premier Sanae Takayi said that the current weakening of the yen is good for the economy and the impact on households due to rising import costs could be offset through aggressive fiscal spending.

The oil prices were stable as traders waited for the outcome of the agreement between Israel and Hamas.

Gold remained at $4,039.59.

Kristalina Georgeeva, Managing Director of the International Monetary Fund, warned investors on Wednesday not to become complacent, saying that the global economy had proven to be more resilient than anticipated.

China has tightened export restrictions on rare earth technologies, extending April's restrictions.

(source: Reuters)