Thu Jul 9, 2015 5:09am EDT
China bounce ends five-day losing streak for stocks
LONDON | BY
A panel outside a bank displays the morning trading of CSI300 index, the largest listed companies in Shanghai and Shenzhen, and the Shanghai Composite Index (SSCI), in Hong Kong, China July 9, 2015.
REUTERS/BOBBY YIP
World stocks snapped a five-day losing streak on Thursday, as Beijing halted a rout in Chinese stocks and the Federal Reserve signaled it might be too soon to raise U.S. interest rates.
European bourses and bonds made early gains as strong export figures from Germany and hopes that Greece's debt negotiations will succeed complemented the overnight rebound in Asia and commodity markets.
China's main stock market jumped 6.4 percent -- almost as much as it had fallen the previous day -- after its securities regulator ordered shareholders with stakes of more than 5 percent not to sell shares for the next six months.
The advance brought relief throughout Asia. A 1.8 percent climb by MSCI's broadest index of Asia-Pacific shares outside Japan was its biggest since April. The main emerging markets index scored its best gain since January.
Europe's mining and metals stocks, which are closely linked to China's fortunes, led the pan-European FTSEurofirst 300 index up 0.9 percent, although investors were far from care-free.
Greek Prime Minister Alexis Tsipras has until midnight to propose spending-cut plans that will convince the euro zone to give Athens a three-year loan to rescue it from bankruptcy. Without the money, it will have to print another currency, probably leading to its exit from the euro.
"The midnight deadline for Europe seems a long way away," said Nick Parsons, global head of forex at National Australia Bank in London.
"Overnight we have a traditional risk-on mood, but there is a general wariness that is crimping investor participation in the market. The order flow really is very thin," he added.
Bond markets appeared hopeful that a deal would still be reached. Italian, Spanish and Portuguese bond yields all fell in early trading. [GVD/EUR]
Even if Greece does end up out of the euro, the European Central Bank has made clear it is ready to jump in to limit any fallout. Ardo Hansson, Estonia's ECB policymaker, said the bank was being forced to face up to the possibility of a Greek exit.
"We can use a wide range of non-standard monetary policy measures and close cooperation with other central banks. We are prepared to implement these capabilities if needed," he said in a Estonian newspaper interview.
COMMODITY COMFORT
The rebound in China and the drop in the dollar following Wednesday's Fed minutes helped steady commodity markets.
"Many participants emphasized that, in order to determine that the criteria for beginning policy normalization had been met, they would need additional information indicating that economic growth was strengthening, that labor market conditions were continuing to improve, and that inflation was moving back toward the Committee’s objective," the minutes said.
U.S. crude advanced 1.6 percent to $52.48 but has still shed nearly eight percent so far this week. Brent was $57.88 a barrel.
The Australian dollar, often used in proxy China trades, gained 0.6 percent to $0.7473. Copper on the London Metal Exchange rose 0.9 percent to $5,569 a tonne after hitting a six-year trough of $5,240 a tonne on Wednesday.
A bounce by iron ore futures < DCIOcv1> in China pointed toward a rebound later in the day for benchmark spot iron, which retreated to a decade-low $45 a tonne overnight.
Oil markets were also watching talks on a potential nuclear deal with Iran that could ease its long-running sanctions.
Iran has offered "constructive solutions," the Iranian Students News Agency (ISNA) reported on Wednesday, but Western officials suggested they had heard nothing new from Tehran.
(Reporting by Marc Jones)
