By Andrew Galbraith
SHANGHAI (Reuters) – The pound and Asian shares jumped on Tuesday after the European Commission agreed to changes in a Brexit deal before a vote in the British parliament on a divorce agreement that has unnerved financial markets over recent months.
The rally in Asia is expected to extend to Europe, where financial spreadbetters see Frankfurt’s DAX opening 0.6 percent higher and Paris’ CAC up 0.5 percent, while London’s FTSE is expected to start just a shade higher.
European Commission head Jean-Claude Juncker agreed to additional assurances in an updated Brexit deal with British Prime Minister Theresa May on Monday, but warned UK lawmakers would not get a third chance to endorse it.
Sterling, which had risen ahead of the talks between May and Juncker, extended gains on hopes the changes may be enough to sway rebellious British lawmakers who have threatened to vote down May’s plan again on Tuesday.
The pound was up 0.4 percent, buying $1.3205 and taking its gains over two days to more than 1.4 percent.
A reduced likelihood of crashing out of the EU with no Brexit deal could help to inject some bullish sentiment into equity markets by eliminating one of the three major concerns of global investors, alongside trade and slowing global growth, said Greg McKenna, strategist at McKenna Macro.
“Take Brexit off the table and I think some of the real money flows that appear to have turned up late last week are likely to be there again. So I think it helps change the backdrop a little bit,” he said.
MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.9 percent.
Chinese blue chips were 0.3 percent higher in afternoon trade, trimming gains but extending the previous day’s rally.
Despite slowing domestic economic growth and uncertainty about