Pound resumes slide at start of key Brexit week

But sentiment about the agreement shifted over the weekend following more subdued commentary in the Chinese press as analysts focused on the fact the deal did not remove any existing tariffs on hundreds of billions of dollars of trade between the countries. And more tariffs could be imposed later this year if talks stumble again.

"Stocks won't fall that much because the trade situation has improved between China and the United States," said Gregori Volokhine of Meeschaert Financial Services.

"At the same, there is a ceiling on how high the market will go because there is s still a chance of new tariffs."

Official data meanwhile showed Chinese imports and exports fell more than forecast in September, as US tariffs and cooling demand at home and abroad hit trade in the world's second largest economy.

The figures weighed heavily on the oil market. Oil prices had surged Friday, fueled by a blast on an Iranian tanker and news of the US-China deal.

The British pound also lost some of its sheen after last week's optimism over Brexit.

Sterling rallied late last week after British Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar said after meeting that they could see a "pathway" to reaching a Brexit deal.

But European officials on Sunday said obstacles remained on how to manage trade and customs between EU-member Ireland and Northern Ireland, which is a part of the United Kingdom.

Time is running out to sign off on any deal at an October 17-18 European Union summit, the last such meeting before Britain's scheduled departure from the European Union at the end of the month.

Sterling "is in the red as dealers are less hopeful that a deal will be struck between the UK and the EU," said David Madden, analyst at CMC Markets UK.

"Sterling enjoyed a massive rally at the back end of last week due to optimism surrounding the Brexit talks, but now the Northern Ireland customs union roadblock has popped up again," he said, adding the possibility of Britain requesting an extension has helped avoid further losses.

- Key figures around 2040 GMT -

Pound/dollar: DOWN at $1.2555 from $1.2668 at 2100 GMT on Friday

Euro/pound: UP at 87.79 pence from 87.17 pence

Euro/dollar: DOWN at $1.1024 from $1.1042

Dollar/yen: UP at 108.39 yen from 108.29 yen

New York - Dow: DOWN 0.1 percent at 26,787.36 (close)

New York - S&P 500: DOWN 0.1 percent at 2,966.15 (close)

New York - Nasdaq: DOWN 0.1 percent at 8,048.65 (close)

London - FTSE 100: DOWN 0.5 percent at 7,213.45 (close)

Paris - CAC 40: DOWN 0.4 percent at 5,643.08 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 12,486.56 (close)

EURO STOXX 50: DOWN 0.4 percent at 3,555.26 (close)

Hong Kong - Hang Seng: UP 0.8 percent at 26,521.85 (close)

Shanghai - Composite: UP 1.2 percent at 3,007.88 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Brent North Sea crude: DOWN 1.9 percent at $59.35 per barrel

West Texas Intermediate: DOWN 2.0 percent at $53.59 per barrel