anna: good morning. i am anna edwards. this is bloomberg daybreak. $200 billion all of branch. h its trades to slas deficit with the united states. the trade representative wants that nafta nations are nowhere near close to a deal. angela merkel is due to meet with vladimir putin today to talk trade in the iran deal after european leaders present a united front against donald trump. rome on the radar. the central bank is monitoring spiking yields.

>> we have to monitor the situation. it is a change from what has been happening recently, the problems of italy are known by everyone. ♪ anna: good morning. it is on 6:00 here in london. this is "bloomberg daybreak: europe." friday morning. let's have a look at these markets. there is an talk around the trade conversation in china. this is in messier asia-pacific ack -- this is the msci sia-pacific index. war? why are trade we not seeing equity markets react more? will the chinese do

that? to?would they try a lot to discuss. why does trump remain doubtful? lots to talk about here. , we have seeneld it moving up at 3.12. just checking in on that. at levels not seen since 2014 on the brent price. i've got nymex in here but the brent price touching $80 a barrel. global stockpiles dropping. in certain about supply -- concern about supply. that is a quick look at where we are. what does that do to u.s. futures? suggesting were could be higher at the start of trade. we saw a domestic focus small-cap. what is coming up during programming today, we are going

to speak to the former italian prime minister, mario monti. lots to talk about in the bond market. that is not :00 a.m. your time -- that is 9:00 a.m. your time. here's juliette saly. juliette: thank you. donald trump has rebutted his security advisor saying libya is not a model for north korea. john bolton has said nuclear disarmament should follow the libyan model accepted by more market off the. north korea says such comments were repugnant threaten to counsel -- to cancel next month's summit with trump. >> there was no deal to keep qadhafi. the libyan mom -- the libyan model was a much different deal.

he would be running his country and the country would be very rich. his people are tremendously industrious. juliette: the european commission will put its blocking steps in place to show this companies doing business with iran from u.s. sanctions. it was the main take away from this week's eu summit were leaders rallied in favor of the battleand vowed to capriciousness. eu is also have said to have brushed off the case latest attempt to strike a brexit deal. theresa maytched -- decided to have a hard border in ireland. the president told her it was too early to give assurances.

>> we will be negotiating arrangements the european union. able to have our own trade policy. we want trade to continue and we want to ensure there is no hard blood between ireland. gaping differences remain on intellectual property, agriculture, energy, labor and much more. paul ryan says weeks are left to strike a deal if congress is to improve an agreement this year. the bank of japan's key inflation gauge shows gains slowed for the second straight month in april. 7.1%consumer prices rose from a year earlier, little lower than estimates. the central bank struggled to

hit its 2% target. warren buffett once called them financial weapons of mass distraction. -- mass destruction. see -- the vatican called them "a taking timebomb." --globalatives left news, 24 hours a day, powered by 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . here in asia, it is fairly flat. we are on track for a weekly decline. a little bit of an upturn come through in the nikkei and some positivity come through in hong kong and china led by the energy

players. we've got brent crude sitting at the highest level since november 2014. the asx 200 is weaker in late trade along with some of the other markets, including here in singapore down .33%. petro in china leading this rally. morgan stanley saying the firm is its new topic for china oil majors. csl rising to a record. to the downside, this auto control maker in seoul up by 2.4%. it did rally closing above 50 day average. anna? anna: thank you. deficit relief. china offers trump a $200 billion reduction in its annual

trade surplus with the united states. the offer was made during talks between the two countries is today in washington. joining us now for more details, jodie snyder. very good to have you with us. what was -- what does china's offer mean for trade talks? seriouses seem to be a olive branch to the u.s. and these trade talks. the u.s. had asked for this. a list of u.s. demands to move forward in terms of trade to avoid tariffs and the potential trade war. this came with the chinese vice premier who has been in washington this week meeting the delegation there. a lot of questions. we still don't know how they would reach that number what analysts told us that would be the number that would be difficult to contemplate, how

you could reach that. it would mean a reduction in some exports. how would that affect supply chains, how much more would they be allowing market access? what could that look like? there are all kinds of questions. there's the question of the u.s. response. president trump surprises us with how he looks at things. we have to see. this is are telling us a favorable move, not only because what he could offer in terms of market access to the u.s. but it shows that china is taking these talks very significantly. they are taking them very seriously and looking to avoid a trade war. we look ahead to where these talks go, the u.s. had other demands. jodi: one other thing that china has put forward that we just found out is they said they will end and anti-dumping

investigation into u.s. imports of sorghum. that is a give on their part. now we will have some more give and take. the talks continue for another day. we will see what the u.s. puts on the table. kudlower issue is, larry told us is that u.s. wants to see significant progress made on what they view as china's violations of u.s. intellectual property rights. we haven't really seen much from china on that. that will be a question, how much does the u.s. want to be there? president trump over the weekend surprised everyone by saying he would back off the chinese telecom manufacturer and look at ways to reinstate their business with the u.s. anna: jodi schneider, in hong

kong. with us here now, piers hillier. great to have you with us. fascinating story. the reporting suggesting that the chinese have offered to reduce a 375 billion dollars a year trade deficit in goods. down by $200 billion. they -- what strikes you as fascinating? piers: it doesn't look like you can do it. we've got to think through this. your colleague made some important points about some issues around patents were china has been recognized -- do you start getting value for that? the one thing we talked about was about the oil scenario as it plays out today. the u.s. would want to offer a carrot in addition to exports.

it was interesting that only yesterday the chinese talked theretaking total out of heir deal with iran. think, it is very early. this is a positive in the sense that having got ourselves into a difficult position without escalating a trade war. sides. the chinese have responded by

saying we are up for trade. we don't want a trade war. anna:xi asked him to make it trade. how would this be done? there is lots we don't know. one of my colleagues writes an opinion piece and has written an interesting piece how to assess what how to get there -- how to there.to get basically what he does is he assumes all of the increased oil imports into china by 2020 come from the united states. he sees something similar with lng. this is the energy story. there's got to be something else happening. piers: there is an element of recognizing -- we talked about this again -- allocation from china. chinese companies are looking to invest in the u.s.. there has been a lot of issues

of the takeover of u.s. entities by the chinese. the final want to consider is there's been a long-term concern about certain technologies leaving the borders of the united states. we have a good working relationship with protecting technologies and u.s. into europe. is that additional piece the chinese are looking for? the u.s. are careful about exports. --se to help to fill the gap those two help to fill the gap. anna: this should be a positive for risk sentiment. be.s: it should anna: you don't see markets react too much. piers: that is fair. when you see a headline, that means be amazing -- that must be amazing. the devil is in the details. how do i respond to this? what we have been seeing over

this week, you touched on the dollar -- steady rise in 10-year yields, oil prices, etc., the markets have said positive on this trade story and looks like trump is offering a branch out to korea again. global growth is slightly slowing and should we be a bit more cautious about risk assets? equity markets should be down this week. 300.oke through that we bumped up against that consistently performance. we broke through materially this week. that is a quite important sentiment change. we saw a similar move in u.k. 10-year yields and european yields as well. one to 1.5% just markets are up 1% to 1.5%. a short move in the oil price is

starting to come into my mind. anna: we will talk about the oil price in just a moment. a lot of u.s. corporate's -- corporates, i remember hearing some companies saying it is all well to focus on the deficit but we need the market access in china. the other parts of the trade conversation, very important for corporates. piers: is the final piece of its excel. the chinese -- it is the final piece of a jigsaw. chinese, that is the way they set businesses up. to invests expecting in chinese innovation. there is a real transition on the way in china in terms of moving into the middle classes.

the demand called is attractive for u.s. assets. anna: thank you very much. he stays with us. coming up we will talk about inflation. inflation drops of the second straight month in japan. .he boj had a 2% target we will discuss global inflation up next. this weekend, tune in for a conversation with president erdogan. he sat down for an exclusive conversation with bloomberg to discuss the economy, upcoming elections and his company's relationship with the west. we bring you that special over the weekend, saturday at 10:00 a.m. london time, five clock a.m. your time and 5:00 p.m. hong kong time. ♪

anna: good morning. "bloomberg daybreak: europe." 6:20 in london.

1:30 in the afternoon over in singapore. msci asia pacific pretty flat this morning. china offering to cut its trade deficit the united states by $200 billion. let's get a business flash with juliette saly. juliette: thank you. toshiba has won china's approval. the $18 billion sale will go as the two sides awaited a decision from beijing. toshiba retaining a stake after the deal goes through. -- $2.2 billion expanding into latin america. paypal's biggest deal will help it complete with i square with process credit card in mobile transactions. -- says it is increasingly

across channels. a picasso self-portrait owned by said to have been accidentally damaged and withdrawn from auction. a paint roller attached to an extension pole fell into the artwork puncturing the painting canvas. was destined to be one of the star looks -- it was destined to be one of the star looks in new york this week. that is your bloomberg business flash. anna: i will have to make other plans to my art collection. japanese inflation slowed for a second straight month in april underscore the boj's struggle to hit its 2% target. core consumer prices rose from the year earlier, lower than the estimate. let's put that into the global inflation come session. piers hillier still with us. this chart shows g10 inflation

in the green. shows it edging a little higher. where -- as we see bond yields continue to rise, where do you see inflation stories heading? piers: it is an interesting contrast. most of the inflation we have seen is by the service rated inflation. the one thing that central banks that have dealt with in terms of not raising rates is the fact that it hasn't fed through into wage inflation at all. that has struggled along. point, it is why we got rates at the current low levels. the contras at the moment is -- the contrast at the moment is it is starting to roll over. what we are starting to see across the world, is wage inflation. when we get the stork low

unemployment levels -- when we get historic low unemployment levels, not to similar messages in japan. japan is slowly seeing that take up -- that tick up. the are a lot more women in the workforce. i've been to japan -- there are a lot more women in the workforce. i've been to japan. there has been a huge influx into the workforce and much more flexible work in japan. that is cap the lid on wage inflation. it does look like that is starting to show progression. the challenge that the japanese have got is they consistently export to deflation. when you get to the net numbers, you get that mismatch. the underlying trend has been more positive than the data has shown this week. we are a bit more constructive on japan in terms of its competitive position. structural headwinds that have

been affected are starting to abate. anna: you talk about some of the structural changes. to some some credit structural change in the economy. we watched the wage story in the united states is that fed jigsaw. what do you think is going to be crucial to watch which will determine how many hikes we will get from the fed? piers: wages in the states is going to be the driver of where powell will come with his next message? the level of the unemployment, he says, i should have a red light on expected rates. his caution is going to be, he's got a large path of liquidity. is the is also aware of global financial crisis.

one thing the u.s. kid -- the u.s. did was keen, that is why qe was what it is. how much can you leave out and allow markets can continue to operate and make sure it is enough liquidity in the system to do that without allowing banks to go off and real ever balance sheets -- read lever balance sheets? it is going be really slow. 10% to 50% -- 15%. anna: you will watch what they do with their balance sheet. they could feel it -- that the feedback and what the fed does. feed back into what the fed does. up next, russia, germany talks. good trump's rejection of the iran accord push angela merkel closer to putin? we saw fascinating events with

europeans standing up to trump over iran. they might be on the same page with the russians on that one. next from moscow. this is bloomberg. ♪

anna: good morning, everybody. this is "bloomberg daybreak: europe." it is 2:30 in the afternoon in tokyo. datasappointing inflation if you're at the boj coming out of japan overnight. we talk a little bit about that in the last half-hour. breaking news from richemont. the story there, the maker of carb day necklace is how much to watch unit will be weighing on this business, the inventory by back there been doing. richemont benefiting from some jewelry.r cartier is that the story as they have been following on the multiyear slow down?

we are watching these numbers come through. sales numbers, something to compare the estimates. 10.9 billion. that is a test below the estimate we had here. the full-year growth margin appears to be in line. we will watch that one at the open. this is what we have than watching out for you today. vladimir putin and angela merkel will be meeting in sochi. they will be talking about tariffs, in terms of the united states and the iran deal. the rest of mustard will be speaking on monetary policy on an ecb conference in french for it -- in frankfurt. that could have an impact on our markets. let's check in. stock.ding water asian that is what mliv bloggers are calling it. the hang seng, a mixed picture. asian stocks seemed to be

rushing off that china has offered president trump $200 billion reduction. mliv reporter says they are waiting for a trump tweet to see whether or not he likes the deal are not as to where equities will go next. dollar bond rates are remaining below historical averages. so much talk on the em market today. the professor at harvard really turning heads this week when she had that downbeat outlook for emerging markets. investors are not sure what it is. our historical average up from 4.5%. the tail end of the chart is slightly coming up. this barclays bloomberg index for emerging markets is one to watch. moving on quickly. let's look at trade as merkel and putin me today in sochi. i am looking at russian trade.

germany accounts for the second-biggest trading market. that is this redline. youcould check out and as said before they will be discussing these u.s. tariffs. both russia and germany want it but the u.s. says no. germany's angela merkel is set to meet russia's vladimir putin today. both leaders are trying to shield businesses from donald trump's sanctions. rebuffed american rejections to a new gas pipeline linking there to countries. countries.their two blocking statutes in place to shield companies in europe that want to do business with iran from u.s. sanctions. lots to talk about them for merkel and putin. anthony halpin.

what exactly will merkel and putin discussing today? i heard a great bloomberg story talking about they met many times. they have been around for a long time. what is on the agenda pulling them closer together? >> good morning. they've got a very big agenda. apart from conflict in ukraine which has been a force of tensions. they've got to discuss the u.s. withdrawal from the international pack -- packed over iran's nuclear program, both germany and russia favor maintaining that program. the threat of u.s. sanctions again a project that both countries want and now both countries are time to figure out how to respond. they are discussing the syria conflict after a surprise visit to putin by syrian president

bashar al-assad. a big agenda and mutually they've got a lot to talk about, criticalutin is always of eu sanctions against russia. merkel is in a mood to give way. -- isn't in a mood to give way. anna: relations between the two seemed strained for years. is she having to reassess elections with russia because of trump's policy? think that is a slightly uncomfortable position that merkel finds itself in. last year she was very bluntly critical of putin in public. this time, i think there is a recognition in berlin that they need some sort of rapprochement with moscow and putin and merkel have some common problems which they need to work together on to deal with in response to trump's

policies out of the u.s. on iran, on trade. on syria, merkel recognizes that russia is the only gaining power if you want a solution to the syrian crisis. on that matter, they are going to have to talk. anna: thank you very much. editor --s pressure russia editor from moscow. for more on bloomberg's coverage ,rom russia, next friday russia's president speaks japan'se his friends, prime minister and damage managing -- and the imf managing director. it will be a big question seen running through next week's coverage building toward the conference at the end of next week. let's talk about emerging markets. piers hillier still with us.

it really fascinating conversation around iran the way that the europeans are trying to stand up to the trump administration. they want to put in place these blocking measures. european companies going to go along with this effort from european leaders? are they going to say we are not going to take the risk? we rely on a dollar system and we are fearful of retaliation from the trump administration? piers: you had a bit of a clue when to tell negated -- when toal indicated they need reconsider the investment into iran. that is where u.s. corporates are nervous when governments opine very quickly. when you're making commitments it is difficult to have confidence. -- although european leaders are saying we are going to support you and find a ring fencing mechanism. the experience in the last

decade of when that has happened where corporates have tried to intervene in trade around levied -- the reverse the reverse levied takes place in the u.s. they are going to be very careful. i understand why the concern in europe, because it is not obvious why the americans are taking the steps they have. what was put forward by israel was not obvious. i think what europeans are trying to angle for americans is what have you identified what is changed -- identified that is changed? we should encourage a peaceful transition in the mold that we negotiated. there is something else out there. does the big we are trying to get our heads around. is there something else -- that is the bit we are trying to get our heads around.

is there something else going on? the hand of iran is glee leads in iraq just iran basically leads in iraq. israel has been a longtime ally of the u.s. we are concerned about that projection. i will know if it is that projection that is causing the americans to want to say something. that is what we are trying to get our heads around from the geopolitical risk perspective. leaders seemopean to be expressing their anger at having to be just having to have been involved -- having to have been involved in negotiations. on the subject of oil, you make that point. merkel heading to russia. russia's economy creaking but benefiting from this boon we are seeing. benefit of that will which mark piers: -- benefit?

piers: that is true. more important for russia, this does make a difference. it has been a real challenge for a long the oh of time just for a long period of time -- for a long the oh of time. the long end of the market really has moved. -- really hasn't moved. is a response to geopolitical risk in the short-term -- this is a response to geopolitical risk in the short-term. they tend to be net imports. so, even china itself in terms of prices, what is different for merkel today, her hand is getting stronger as alternative energy becomes more of a stable to the european markets. they need and demand believe some of the pressure that would

do it have in terms of turning off the lights in the middle of a european winter. they are not gone but they are becoming less of a pressure. the diversification of energy source and's -- energy sources. " maybe that changes the north stream, -- anna: maybe that changes the north stream composition. if you're a bloomberg user and you want to get a hold of somebody charts we are using, the tv is the place to go. go -- gtv go. coming up, italy's populists it's closer to form a government. we discuss italy coming up next. the former italian prime minister joins bloomberg at 9:00 a.m. new york time. this is bloomberg. ♪

anna: this is "bloomberg daybreak: europe." morning inand the london. building youate see there, blue, white and yellow in honor of the new york city police foundation. here's a juliette saly from singapore. juliette: toshiba has won china's approval to sell its chip unit. the sale will go ahead on june 1 having missed earlier deadlines as the two sides awaited a decision from beijing. the group includes apple and seagate technology with toshiba retaining a stake after the deal goes through. settle foruying i

$2.2 billion. deal will helpt it complete its square which processes credit card and mobile transactions. small businesses increasingly kate --ull sweep of full suite of capabilities. auctionrawn from according to a person familiar. a paint roller attached to an extension pole fell into the artwork puncturing the paintings canvas. it was destined to be one of the star lots in new york this week. i know you're upset about that, anna. anna: misbehaving paint rollers. juliette saly in singapore. let's talk about italy's populists agreed to form an test form a coalition government. -- form a close in government.

he sees monday as a make or break moment. at the parties -- as the parties it's closer, italian bond spreads have been widening. the outgoing ecb vice president says they have been watching the situation. move -- we have to monitor the situation. it has changed with what has been happening recently. the problems of italy are the same as known by everyone. course, they yields and the spreads have been contained. until recently, there has been a spike. we'll see how it will develop. anna: joining us now, here's kevin consolo just kevin costello. what can we expect from the markets?

date?ake or break kevin: you can expect nervousness on the markets. you saw that from mr. constantia. the markets have been taking this in a relaxed way. now this week, you saw the bond spreads widening. you saw the yields going up and this bond -- and the bond stock exchange is now down 1% over the week. anna: what is the sticking point now is the coalition partners part -- partners promised a deal today. what are the sticking points? kevin: they are immigration, deficit spending and the relations with the european union and brussels. these are pretty major things and they are still being ironed out now. anna: we're still waiting to get details. what is the latest on who is going to be the next prime minister?

that is going to be another important stumbling block. kevin: the latest is, there is the latest. they have been talking and names have been thrown around. there is still no real sign of who will lead the new italian government. anna: thanks very much, kevin. the new news is there is no news. piers hillier is still with us. we wait and find out who will be prime minister. meanwhile, there has been a spike in btp yields, something that has happened a lot, we have this chart. nervousnessing some around this situation. piers: markets aboard a vacuum. the longer this goes on, the more concerned people are about the relationship for italians and europeans. this is sitting in london that

knows what this experience is like. this coalition comes with the wrong flavor, it is more broad imprecations. in terms of looking at the european banking situation and we talked about this, we have been reasonably relaxed. banks balance sheets have been bank balance sheets have been in repair. yields basically will help them establish that. if you're going to a change in government it has a different tone to that. debt and underlying government spending. that is a game changer. markets are time to add in more specific risks for italy. talk about spread widening is a reflection of the concern. more broadly we have seen this u.s., a rise in

bond yields. anna: it is interesting. i've had a lot of conversations talking about one particular junkie. just one particular geography. -- one particular geography. in terms of taking this in italy, do you set this aside and say there is too much uncertainty? there are names which remain uncorrelated with governments that are not empower? piers: from and the invest -- from an equity investment perspective, we have looked at models and their are good examples -- there are good examples. there isn't enough job formation. they've got to structure an address which is why we've got this coalition trying to be formed.

someone once a new vision in terms of how we encourage investment into italy. how do we encourage job formation? that is why they want to increase government spending. you've got to remain competitive. the problem is innovative factor versus the cost factor. the crawlspaces too high relative to margin compression. we find securities look very attractive in that market but structurally, there's still a problem. that is why you have a different political flavor. anna: how much should they stick to the euro? we have seen a weakening euro. that is been a strong dollar story. it has affected the euro. really for some german exporters who may be concerned about trade. piers: the fact that european emi's have been rolling over --

pmi's have been rolling over. driven by germany. german exports led that will rally and they rolled over it albeit, rolled over at high levels. i think there is a healthy combing -- healthy calming. there is an expert tatian to reduce or normalize rates. -- there is an expectation to reduce qe or normalize rates. people take stock of some of the challenges. long bond yields starting to rise in the cost of capital starting to rise. are there issues within europe that we haven't fully appreciated? they will come up over the summer. we'll have more work over the summer. as we see rates go higher globally, european corporates

assess their health and balance sheet strength. we have come through qe with incredibly low interest rates. how can european corporates koke with just -- cope with that? piers: that is a good question and one we have been concerned about. it is been very cheap, european corporates, credit and entire equity. the concern has been the lack of actual investment innovation. it has been a refinancing game. i think for us it is going to be interesting to see we will start -- with ratesut where they are. the challenge is going to be if we see any normalization of rates as well as the the ratio. anna: what are the sectors you are interested in? when you look

at european equities? less conscious is the -- less country specific rates. there is much more international trade. we think the global backdrop is positive so european exporters are beneficiaries -- benefit us -- benefiting from that. anna: thank you for joining us, piers hillier. let's have a quick check on the markets for you. 6:55 here in london. msci asia pacific edging higher, better than it was an hour ago. the dollar index is pretty flat. 3.11% bond yields, continuing to its higher this week. the dollar story in their. -- in there. brent up.

79.52. we went over $80 a barrel during yesterday's session. that is interesting to markets. global stockpiles increasing. a programming note. this weekend, we will bring you a conversation with turkey's president. you can see that people interview on saturday at 10 a.m. london time. we brought you some the market moving headlines of that interview. if you want to catch the old thing, you will found that on bloomberg television over the weekend. deficit relief. china is said to have offered a $200 billion reduction in trade deficit. beautiful site this friday morning over london. we will get you up to date on that chinese trade story

shortly. this is bloomberg. ♪

♪ anna: good morning from bloomberg's european headquarters in the city of london. this is "bloomberg daybreak: europe." these are today's top stories. china offers to cut its trade debt with the united states. trump's trade representative ones that nafta nations are nowhere close to a deal. angela merkel is due to meet with the vladimir putin today to talk trade and the iran deal. that is after european leaders presented a united front against donald trump. ecb's -- tells bloomberg that the central bank is spiking -- monitoring spiking btp yields

as the government's edge toward a coalition deal. >> it is change from what has been happening recently. the problems of italy are the same. it is known by everyone. ♪ anna: good morning, everybody. it is friday morning, 7:00 in london. mrs. -- this is "bloomberg daybreak: europe." breaking news from the drug sector. a confirmation of 2018 full-year guidance unchanged. astrazeneca is maintaining their guidance. the estimate was for $.57 per share. they are maintaining their full-year view. they still seek full-year core eps at 350.

the estimate was 345. it is interesting to look at the details as they come here. you have got a bouncing act for astrazeneca between the newer drugs and older drugs. newhart treatments, disease drugs -- new heart disease drugs. one of the more controversial strategies has been called externalization. how much is this external eyes externalization process went on these numbers -- weighing on these numbers? there was an agreement that gave a u.s. based company an interest in one of the the breast cancer treatments. it is interesting to see these numbers. court eps at $.48 per share.

the estimate was $.57. looking for some numbers coming out of the banking sector in the united kingdom. would have got some details on lloyd's. they are saying that they are selling their irish residential mortgage portfolio. a very substantial transaction. they are selling this irish residential mortgage portfolio to barclays bank, which is interesting. we will continue to watch the details about that lloyd's story coming through. they are selling the residential mortgage business in ireland to barclays. cash consideration of about $4 billion. reorientation around the irish market for these businesses. these are the futures. the picture for the european futures. u.s. futures have been pointing decidedly higher this morning.

we see a much more mixed picture coming through across european equity markets this morning. flat in london, more upside to the decks -- dax. some clues asu to where we have come overnight. we have got this fascinating story. the chinese delegation on trade in washington have offered to cut the trade deficit between china and the united states by $200 billion. how can they? will they? what exactly will be involved? what about the trump administration's other demands? so many questions around this. we are edging higher on the asia-pacific story. does this mean that we have less in terms of trade tensions to talk about? the rising u.s. yields have been another big story. brent crude has touched over the

$80 mark. we are down a little bit from that $80 per barrel mark. this is what we have gone the bond markets for you. we watching the btp markets. andave got bond futures u.s. bond futures in there as well for you. a quick snapshot of where we are on the bond markets. this get a bloomberg first word news update with juliette saly. juliette: u.s. president donald trump -- the european commission will begin put a blocking statue in place to shield its companies during business with iran from u.s. sanctions. the deepening transatlantic rift was a main takeaway from the summit. they bow to confront what the eu president calls donald trump's assertiveness. the e.u. is said to have brushed

off russia's latest attempt -- britain's latest attempt to strike a brexit deal. president -- told her it was too early to give any assurances because of that disorientating messages that the eu was getting from london. future customs arrangements with that the european union. i have set the objective. be able to have our own independent trade policy. when a trade to continue. we want to ensure that there is no hard border between the north of ireland and ireland. juliette: u.s. trade representative has said that the nafta countries are nowhere near close to a deal. onre are big differences

intellectual property, agriculture, energy, labor, and much more. paul ryan says that just weeks are left to strike a deal if congress is to approve on aneement this year -- agreement this year. global news 24 hours a day, powered by more than 2700 journalists and analysts in more than 120 countries. you can find more stories on the bloomberg at top . we're starting to see more of a pickup coming through in asian stocks. it has been a fairly flat session. there is more buying coming through in these chinese stocks in late trade as we anticipate there could be a easing of trade tensions after this news between the u.s. and china. a bit of weakness in the indian market today. having a look at stocks. it has been the energy players rallied on the back -- rallying on the back of what you have seen with brent.

china high-speed railway doing very well after an agreement with the tencent unit to work on mobile internet on some of its strengths. we see the banks in indonesia looking good as well. the first interest-rate hike since 2014 coming through in indonesia after the bell yesterday. we are starting to look at analysts changing their forecast a little bit. the rate hike may slow, but not stop the foreign funds exit from the indonesian market, which as we know is the worst-performing amongst the emerging markets in asia. anna: juliette saly in singapore. -- tohas said to offer have offered president trump it to hundred billion dollar reduction in its annual trade surplus with the united states. the offer was made in talks yesterday in washington. joining us now for more is jodi schneider, bloomberg's senior

international editor in hong kong. good morning again. what is china's offer mean for the trade talks -- does china's offer mean for the trade talks? >> there is still a lot of details to come. $200ffer of reduction of billion in the annual trade deficit is viewed as significant , not just as a way to open up the markets and open up more to imports, which is something that the u.s. has had on its list of demands. but also as a signal that china is very serious about these trade talks and hoping to avoid a trade war that would ensue if u.s. wereffs from the to go into effect. other analysts are saying they do not necessarily see how china can come to that number. one said it would be difficult to contemplate how they could reduce that trade deficit but $200 billion -- by $200 billion.

there would likely have to some reduction in chinese exports. there is still a lot of questions around this. we do not know how the u.s. will respond. been -- has also demanded that china make changes on how it deals with intellectual property. the u.s. is saying that china has had violations of u.s. intellectual property rights. that is something that larry kudlow said needs to be on the table as well. this is viewed as a generally a good sign, a sign that the talks are moving ahead, and china is taking it seriously. earlier talks in beijing did not go as well. they did not make much progress. seemed wide apart then. now we have this surprising have might. this $200 billion potential

move. what is next for the stocks -- these talks? we don't know what china wants in return or what happens to the united states'other demands -- united states' other demands around the markets. >> we do not know what the chinese want in return. that is one of the questions. another element in this is that china has said they will stop an investigation into what they have said is anti-competitive dumping of u.s. imports. they have scrapped that at the moment. that is another element. where does this go from here? both sides will continue to talk in washington. the chinese vice premier is there. he is an insider and close to the chinese president. he knows the u.s. well and has worked with the u.s.

counterparts of four. deadlines ark -- counterparts before. deadlines are coming up for those tariffs. everybody wants to talk about. china has said it will retaliate and it becomes harder to tampa easily tensions -- ease those tensions. china has made serious offers, according to administration officials. anna: thank you. that is jodi schneider in hong kong. joining us now is valentin marinov, head of x x -- fx research at credit agricole. why have we not seen markets jump on this more? this seems to be a very substantial offer from the chinese. the are a lot of details we do not know -- there are a lot of details do not know and people who were not believe that china

will redo this -- reduce this trade deficit but hundred billion dollars -- by $200 billion. valentin: when the initial demand of 200 billion came from the trump administration, the initial response was that it was too aggressive. the fact that they are now willing to do that is raising the question, how will they do that? --h that hurt their exports will that hurt their exports? will that hurt global trade? think how to get to that number, those questions will hold the markets for the time being. anna: even if this is substantiated by the chinese, because of the difficulty of leaving it is possible to get there by 2020, we have limited risk on potential? valentin: yes, if they want to

get there, they will have to sacrifice and change their view on opening up their financial industry, their data service industry, all of that. it will not be that easy for them. es.se are very red lin if they indeed want to continue to shield their domestic markets it means they have to be exporting less to the u.s. to cut that trade deficit, or trade surplus with the u.s. that is negative for global trade and global growth. while the news may be encouraging, we really need to see the details to see how feasible it is. anna: interesting to talk about how it is possible to do it. this is 1922 on the bloomberg. rising on the u.s. dollar. rising, fairly stable

against the u.s. dollar. lots of details about this that we do not yet understand on this story. if we see the chinese promising to reduce their deficit, as you point out, this might have a negative impact on their own economy. the pbc could take some action on interest rates, the amount of debt they have in the chinese economy. this could have big implications. they will be relying much less on global trade. it is way too early for them to restart -- start considering that. on the whole, measures that are going to curb their competitiveness could have more significant negative implications for their overall growth outlook. an isact that the yu

strengthening against other trading partners is not encouraging. this could ultimately hurt the chinese growth outlook. given the importance of the chinese economy for the global economy, it could continue to be seen as a growth negative -- global growth negative. anna: ok. thank you so much, valentin atinov, head of fx research credit agricole stays with us this morning. vitor constancio weighs in on ethics volatility -- volatility. we will hear more from our exclusive interview. he also talked about italy. mario monti, the former italian prime minister, joins us for an exclusive conversation at a cop a.m. london time -- 9:00 a.m. london time. this is bloomberg. ♪

♪ anna: good friday morning to

you. this is "bloomberg daybreak: europe." 7:19 in london. thelast cash trading day of week. here is a juliette saly. has won ofoshiba wonle -- approval -- approval. the deal will now go through. with the toshiba retaining a stake after the deal goes through. paypal is buying swedish small forness platform izettle $2.2 billion. paypal's biggest ever deal will help it compete with square, which processes credit card and mobile transactions.

it cost so self-portrait is said -- a picasso self-portrait is said to have been damaged. -- paintattached to roller attached to an extension pole damagedit -- it. that is your bloomberg business flash. anna? anna: thank you very much. juliette saly in singapore. volatility and fx markets has always been a concern for ecb. that is according to vitor constancio, who talked to bloomberg. >> we were concerned always with volatility, excessive volatility in exchange rates -- and exchange rates. we do not have a target for exchange rates, as you know. the volatility in foreign exchange markets, particularly

among the advanced economies, has been a result of what has happened to the dollar. that is still the story. anna: that was the ecb vice president, vitor constancio speaking exclusively to bloomberg. still with us is valentin marinov, head of fx research at credit agricole. is it a strong dollar or weak euro story? valentin: a little bit of both. it is driven by the political concerns in europe center dot italy. at the same time, the demand for dollar on the global market. that is driven by more aggressive policy normalization. all that is helping the dollar. from here, the question is, what are those drug -- whether those drivers could change, will change. i think on the euro side, i

think the key driver for the euro in the coming months will be the ecb's policy normalization. maydevelopments in italy slow down, but not necessarily derail the process. markets these days are dominated by international investors. there are not many sellers of btp. in of the btp market is domestic hands. and he changed to the political landscape in italy may be minimal or not as aggressive towards ecb change -- to warrant ecb change. anna: where does that leave the ecb in june? valentin: june may be cutting it a bit too close. we really want to know what is going to happen. the plans that the five-star and

delete have agreed to -- and the league has agreed to has to be voted on. chipresident has to in as well. in terms of timing, ultimately mid-june may come very soon. for the ecb, they may want to have more clarity on what is going to happen in italy before they announced to the markets that qe is going to come to an end. july is another option for them. i don't think the selloff in the btp market will continue an aggressive fashion. ecb will find comfort in the fact that there are institutions in italy that may restrict to a degree all of these inclinations by the new italian populist government. the result -- as a result, that

make indeed result in less of a tightening of the financial conditions in italy. anna: just a brief word on emerging-market currencies. this chart talking about a trifecta of concerns for emerging markets. higher oil prices, higher interest rates, and the dollar on the rise. how much are you putting emerging markets out of favor as a result of this? valentin: we are talking about four $5 trillion of eliminated -- $4.5 trillion of debt by the emerging markets. caused stronger dollar against the local currency. that is making the pile of debt more expensive. i'm not sure the reaction is to abandon the markets. coupled with stronger oil prices, that is kind of a

perfect storm for those guys. i think certainly cautiousness is warranted here. anna: it fixed on and trifecta of concerns. thank you very much. good to get your thoughts. valentin marinov, head of fx research at credit agricole. just over 30 minutes to go until the start of european equity trading. a few stocks that we have got our eyes on. keep an eye on airbus and a number of european exporters. we wait to hear from the chinese delegation on those headlines. what does that do to big european exporters? richemnt in focus -- ont a focus because of their numbers. lloyd's bank as well. astrazeneca, their numbers coming in lackluster compared to estimates. the eps missing the lowest estimates.

that is it for "bloomberg daybreak: europe." "bloomberg markets: european open." his up next. this is bloomberg. ♪ mom you called?

oh hi sweetie, i just want to show you something. xfinity mobile: find my phone. [ phone rings ] look at you. this tech stuff is easy. [ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. ♪

manus: friday morning. welcome to "bloomberg markets: european open." we are live from our european headquarters in london. i am guy johnson. matt miller is up-to-date. cash trading is -- off today. cash trading is less than 30 minutes away. ♪ guy: trading down. offered america a $200 billion reduction in its annual trade surplus. how would this actually work? how will trump responded? markets await the first tweet of the day. transatlantic tensions.