SHANGHAI (Reuters) – Asian stocks stumbled on Friday, erasing earlier gains after China posted its weakest growth in nearly three decades, countering a global lift in sentiment on the UK and European Union striking a long-awaited Brexit deal.

But the Brexit boost that helped markets on Thursday looks to have faded, with shares in Europe expected to open lower. Pan-region Euro Stoxx 50 futures STXEc1 were down 0.42% at 3,573, German DAX futures FDXc1 fell 0.46% to 12,621.5 and FTSE futures FFIc1 were 0.4% lower at 7,145.5.

China’s economy grew 6.0% in the third quarter, less than expected, and the weakest pace in at least 27-1/2 years, as the Sino-U.S. trade war hit demand at home and abroad.

While the downbeat data raises the prospect that Chinese policymakers could prepare more measures to boost growth, analysts and market players said Beijing has relatively little room for significant easing.

“How much traction is monetary policy going to get? If there is any short-term move (higher) here in Asia it will genuinely be only short-term players because we’re not far from printing 5% in China GDP, and that’s not going to be good for risk assets,” said Greg McKenna, strategist at McKenna Macro.

“It doesn’t matter how excited you get about stimulus, it is not going to be good for risk assets.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3% by around 0612 GMT, erasing earlier small gains. Australian shares dropped 0.52% and Chinese blue-chips .CSI300 were off 1.53%. Japan’s Nikkei .N225 ended 0.18% higher.

Sterling, which had enjoyed its biggest rising streak since October 1985 and hit a five-month high on the back of the Brexit deal, gave up ground on Friday morning amid doubts that the agreement would receive parliamentary approval. The pound eased 0.29% to buy $1.2850. GBP=

“Whatever was agreed last night with the EU still has to go through the British parliament…the uncertainty surrounding that still hasn’t changed one iota,” said James McGlew, executive director of corporate stockbroking at Argonaut in Perth, Australia.

Equity markets had enjoyed a bounce on Thursday from the initial Brexit deal news, with the S&P 500 .SPX briefly topping 3,000 points for the first time in more than three weeks.

Helping to alleviate immediate trade war worries, China said on Thursday that it hoped to reach a phased agreement in its trade dispute with the United States as soon as possible.

Investors were also encouraged by upbeat earnings from Netflix (NFLX.O) and Morgan Stanley (MS.N), but poor results from International Business Machines Corp (IBM.N) and weak U.S. economic data weighed.

Housing starts, industrial production and mid-Atlantic factory output all fell short of economist expectations.

The Dow Jones Industrial Average .DJI gained 0.09% to 27,025.88, the S&P 500 .SPX finished up 0.28% at 2,997.97 and the Nasdaq Composite .IXIC rose 0.4% to 8,156.85.

On Friday, S&P 500 e-mini stock futures, were down 0.23% at 2,991.25.

Reflecting the cautious mood, the yield on benchmark 10-year Treasury notes US10YT=RR fell to 1.7396% compared with a U.S. close of 1.755% on Thursday.

In the currency market, the safe-haven yen strengthened, with the dollar falling 0.13% to 108.51, while the euro EUR= was flat on the day at $1.1123.

The dollar index, which tracks the greenback against a basket of six major rivals, was barely lower at 97.599.

Oil fell, with Brent crude easing 0.52% to $59.60 and U.S. crude dropping 0.19% to $53.83.

Spot gold XAU= rose to $1,492.25 per ounce.

(GRAPHIC: GBP loses Brexit deal boost – here)

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