LONDON, Jan 16 (Reuters) – World equity markets on Wednesday held their nerve after the heavy parliamentary defeat of British Prime Minister Theresa May’s Brexit deal as investors saw potential for legislative deadlock forcing London to delay its departure from the EU. May’s government faces a no confidence vote at 1900 GMT after the shattering rejection of her Brexit blueprint on Tuesday evening left Britain’s exit from the European Union in disarray. May is expected to survive the vote, sponsored by the main opposition Labour Party, but investors could see scant sign of a breakthrough in the Brexit impasse. As a result, they are increasingly betting on Britain being forced to postpone its planned March 29 exit, though few have any clarity on what that would mean for the country in the longer run. Stock markets had largely priced in the overnight defeat, and for the most part held on to early gains that mirrored earlier resilience in Asian markets. There, stocks had shrugged off May’s defeat and were lifted by signs that China will take more steps to bolster its slowing economy and the U.S. Federal Reserve might pause its run of interest rate rises. “Markets seem to be pricing in a greater probability of a ‘soft Brexit’,” said Azad Zangana, a European economist and strategist at Schroders. “However, we believe that investors are getting ahead of themselves.” The MSCI world equity index, which tracks shares in 47 countries, ceded early gains to slip 0.1 percent, while European stocks gained 0.2 percent.  French and Spanish bourses edged up, while Germany’s main index lost 0.1 percent. Britain’s main equity index dropped as much as 0.6 percent with investors shifting focus from Brexit to results and news of mergers and acquisitions.