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The EU has sent Theresa May home with nothing

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Europe markets ended mostly lower on Thursday, as investors turned their attention to a European Central Bank meeting and Brexit issues, with optimism over global trade taking a back seat. The Stoxx Europe 600 gave up 0.2% to end at 349.42. Germany’s DAX 30 edged less than 0.1% lower to 10,924.70, while France’s CAC shed 0.3% to 4,896.92. The U.K.’s FTSE 100 declined less than 0.1% to 6,877.50.

U.S. stocks closed mostly lower after making small moves in and out of positive territory Thursday as investors continued to fret over the lack of clarity and progress in U.S.-China trade talks. The Dow Jones Industrial Average bucked the trend to finish with a gain of 0.3%, at 24,597.38. The S&P 500 index edged down slightly to end at 2,650.54 and the Nasdaq Composite Index shed 0.4%, to close at 7,070.33.

European Union leaders rejected outright the British Prime Minister’s last-ditch attempt to save her embattled Brexit deal.

After being forced to pull a vote on her deal in the House of Commons, May pleaded with EU leaders to bolt on legal assurances that would assuage lawmakers furious over a crucial element, the so-called Irish backstop.

But after an apparently lackluster presentation by May, EU leaders rejected the demands and instead stepped up plans for a no-deal Brexit.

Events of the past few months have solidified May’s reputation as a political survivor. But the decision to call off the Brexit vote in parliament, followed by a no-confidence vote in which a third of her MPs registered their disapproval of her leadership, May is seriously weakened.

That’s less than 70 days before the March 29 Brexit deadline, and precious little time to negotiate a new deal should the current one be voted down, even if the EU wanted to.

Labor and other opposition parties have pledged to call for a vote of no-confidence in the government, should May’s bill be defeated. That could lead to a general election.

Following the defeated Conservative leadership challenge this week, the math may be in their favor. May’s critics within her own party are stuck with her through the Brexit process — the failure to win this week’s confidence vote means they can’t launch another challenge for 12 months.

The only other option for May would be to call a second Brexit referendum. That would require her to reverse her implacable opposition to such a move — although it would not be her first big policy U-turn.

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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