SYDNEY: Asian stocks took a breather at 18-month peaks on Wednesday having climbed for five straight sessions, while the British pound was licking its wounds as revived Brexit fears came back to bite it. MSCI`s broadest index of Asia-Pacific shares outside Japan was dead flat in thin early trade, just off its highest since June last year.


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Japan`s Nikkei dipped 0.1% and away from its 2019 top, while Korean shares edged up 0.1% to an eight-month peak. E-Mini futures for the S&P 500 were little changed. Upbeat economic news had helped the S&P 500 reach a record for the fourth straight session, building on its 27% gain this year. The Dow ended Tuesday up 0.19%, while the S&P 500 gained 0.07% and the Nasdaq 0.11%. 


US housing starts were surprisingly strong in November, and building permits rose to the highest level since May 2007. Manufacturing output picked up more than expected as a strike at General Motors Co ended.


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A run of better data recently has helped calm fears of recession while the phase one Sino-US deal on trade seems to have lifted some of the uncertainty on the global outlook.


The sea change was clear in BofA Global Research`s latest survey of fund managers with recession concerns diving 33 percentage points to a net 68% of investors saying a recession is now unlikely in 2020.


Global growth expectations jumped 22 percentage points, marking the biggest 2-month rise on record. As a result, funds` allocation to global equities climbed 10 percentage points to a net 31% overweight, the highest level in a year.


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Yet it might be too soon to declare an all-clear on the political front with UK Prime Minister Boris Johnson upsetting markets by taking a hard line on Brexit talks.


Johnson will use the prospect of a Brexit cliff-edge at the end of 2020 to demand the EU give him a comprehensive free trade deal in less than 11 months. The threat of a hard exit sent shivers through sterling, which slid 1.5% in its largest one-day fall this year.


The pound was last at $1.3110 having shed all the gains made on Thursday and Friday after it became clear that the Conservative Party was heading for a big win. 


"We treat the risk of a hard Brexit as a `tail risk` at this stage," said Joseph Capurso, a senior currency strategist at CBA. "A UK-EU trade deal by end 2020, while difficult, is still possible."


"In our view GBP/USD will remain supported at around $1.3000-$1.3100 and upside contained near $1.3500 over the next several months."


Sterling`s slide gave the dollar index a lift to 97.184 against a basket of currencies, extending a bounce from last week`s five-month low of 96.588.


The euro also surged on the pound and was steady on the dollar at $1.1150. The yen was little changed at 109.52 per dollar.


Spot gold was idling at $1,475.90 per ounce , after a couple of very quiet sessions.


Oil prices eased from three-month highs as data showed U.S. crude stocks rose unexpectedly in the most recent week. 


US crude fell 37 cents to $60.57 a barrel, while Brent crude futures had yet to trade.