Stock markets rise as US inflation data, ECB rate loom

NEW YORK -- Global markets rose on Monday at the start of a busy week that includes the release of key US inflation data and a European Central Bank decision on interest rates.

Wall Street pushed higher, with traders already focused on Wednesday's consumer price index (CPI) report, which could determine the Federal Reserve's next move on interest rates.

"Today's generally quiet session means that attention is focusing squarely on the US CPI data and ECB decision due this week," said Chris Beauchamp, chief market analyst at online trading platform IG.

"With the risk that both could deliver nasty surprises, risk appetite has been limited," he added.

Investors have worried that the Fed's rate-hike campaign to combat high inflation could tip the world's biggest economy into a severe recession.

But US Treasury Secretary Janet Yellen said Sunday she was optimistic that the economy was on course for a soft landing.

"I am feeling very good about that prediction," she said. "I think you'd have to say we're on a path that looks exactly like that."

She added: "Every measure of inflation is on the road down."

The Paris and Frankfurt stock exchanges closed higher even though the European Commission cut its 2023 growth outlook for the eurozone, from 1.1 percent to 0.8 percent.

The data will give the ECB more food for thought when it meets Thursday to decide whether to continue or pause its own rate hikes.

The commission said the higher borrowing costs had an impact on the eurozone economy.

"The new forecasts won't come as a major surprise and may even prove overly optimistic over time but they do come days ahead of the next ECB meeting and could tempt some policymakers into voting to pause the tightening cycle," said Craig Erlam, senior market analyst at the OANDA trading platform.

"Weaker economic readings will probably drive a lively debate and they obviously won't suggest, if they do hike, that it's job done," he added.

Elsewhere, London also rose while Tokyo and Hong Kong finished lower.

After a slow start, Asian traders turned more positive through the day and tracked last week's gains on Wall Street, with data showing a pick-up in Chinese inflation lifting sentiment.

Traders took heart from news that China's consumer price index rebounded in August, having contracted the month before.

While the 0.1 percent rise was less than expected, it gave traders some hope that the economy is slowly on the mend after a painful 2023 so far.

On currency markets, the yen picked up after sinking last week to a 10-month low against the dollar, with support coming from comments seen as hawkish by Bank of Japan boss Kazuo Ueda.

He told the Yomiuri newspaper that policymakers would have a better idea later in the year about wage rises, a key data point for rate decisions.

The yen has tumbled around 10 percent owing to the BoJ's refusal to move away from its ultra-loose monetary policy while the Fed pushed borrowing costs to a two-decade high.

The yuan also bounced back from a 16-year low against the dollar after the People's Bank of China said it would crack down on speculation that distorts the value of the currency after months of volatility.

In energy markets, gas prices rallied as strikes continued at Chevron plants in Australia.

Agence France-Presse

Global stocks finish mixed to cap lackluster August

NEW YORK -- Global indexes mostly dipped on Thursday, capping off a lackluster month of growth for markets around the world.

European stocks mostly slipped, as did major Asian markets with the exception of Japan's Nikkei 225 index, which rose on renewed confidence in manufacturing stocks after auto giant Toyota posted strong earnings results.

Wall Street stumbled to end Thursday's session, with the Dow and S&P 500 both falling as traders digested the latest inflation numbers and looked ahead to jobs data that could prove crucial to future interest rate decisions.

A small rally on Thursday failed to save the Nasdaq from seeing its worst month of the year, while the pan-European Euro Stoxx 50 also saw a disappointing month overall.

Both the US Federal Reserve and the European Central Bank have adopted a more data-dependent approach on whether to increase interest rates further.

That made the latest inflation data all the more important ahead of the next monetary policy meetings due in September.

The Fed's preferred measure of inflation, the personal consumption expenditures (PCE) price index, rose to a 3.3 percent annual increase in July, up from 3.0 percent in June.

Thursday's data was "probably widely viewed as just fine," Craig Erlam of the OANDA trading platform told AFP.

"It's good enough for now but there's still a lot of improvement needed over the coming months," he added, before the Fed can begin relaxing monetary policy.

Sticky inflation

Across the Atlantic, stocks in Frankfurt rose while those in Paris fell after data showed the annual rate of inflation in the eurozone remained unchanged in August at 5.3 percent. This came as a smaller drop in energy prices balanced out a rise in food and drinks costs.

Analysts said the data increased the chance of the European Central Bank deciding against a further interest rate hike next month. That in turn weighed on the euro.

"With unemployment starting to show signs of increasing across the bloc, markets are starting to price an increased probability of a pause in the ECB's rate hiking cycle when the governing council next meets on September 14th," said analyst Michael Hewson at CMC Markets.

In Asia, China revealed that factory activity shrank again this month while services weakened, which will likely pile further pressure on authorities to press ahead with measures to kickstart the sputtering economy.

Officials have announced a series of pledges to help various sectors -- particularly the property industry -- and there is an expectation that more is on the way.

In the latest measure, local reports Thursday said the central bank is drawing up policies that will make it easier for private firms, including developers, to access funding.

But analysts say more wide-ranging government spending will be required to appease nervous investors.

Fresh data showing the country's manufacturing sector contracted for a fifth straight month in August only added to the arguments for more help.

On the corporate front, shares in UBS jumped six percent after the bank giant said it would fully absorb the Swiss unit of its recently-swallowed rival Credit Suisse.

Agence France-Presse

Global stock markets mixed as rally fades

NEW YORK -- Stock markets diverged Wednesday as a global rally faded, despite more data that soothed fears of a further rise in US interest rates.

Wall Street closed higher as private sector hiring data came in softer than expected, while second quarter GDP growth was revised down to 2.1 percent on an annual measure.

The latest figures and other weaker numbers revealed on Tuesday "appear to be adding weight" to the idea of a pause in rate hikes by the US Federal Reserve next month, said CMC Markets UK analyst Michael Hewson.

This adds to "further downward pressure on yields," he said. Lower yields on bonds tend to boost stocks as they signify lower borrowing costs for companies.

Fed chief Jerome Powell said last week the US central bank stands ready to hike interest rates further, having already pushed them to a 22-year high to tame prices, if data shows the US economy continues to grow strongly and price pressures persist.

But the Fed's data-dependent approach is also seen as keeping the possibility open that interest rates may not go any higher if the world's largest economy cools.

That set off strong gains at the beginning of the week, particularly after Tuesday's report on US job openings, which was softer than anticipated. Analysts said it would give monetary policymakers room to hold off on lifting borrowing costs again.

"Signs of America's cooling economy have raised hopes that the pause button will be pushed on punishing interest rate hikes," noted Susannah Streeter, head of money and markets at Hargreaves Lansdown.

But with stocks having posted solid gains in recent days, the rally may be running out of steam.

"We suspect traders might be showing some hesitation, thinking that this heady action can't persist or, at least, opting to wait and see if it does," said analyst Patrick O'Hare at Briefing.com.

On Wednesday, the Dow closed 0.1 percent higher while the S&P 500 rose 0.4 percent.

Investors may also be showing caution as more data is due later this week, including the Fed's preferred gauge of inflation -- the personal consumption expenditures price index -- as well as US government payrolls data.

"Today's data was never likely to be overly impactful with tomorrow's inflation, income, and spending figures, prior to Friday's payrolls, always the primary focus," said analyst Craig Erlam of OANDA.

"That could well set the tone for September ahead of some major central bank meetings," he added in a note.

In Europe, London stocks rose while Frankfurt and Paris fell. Tokyo closed higher, but Shanghai and Hong Kong flattened.

Focus was also on China after a report said its biggest state-backed banks would slash rates on mortgages and deposits as part of a drive to support the country's beleaguered property sector.

And after Asian markets closed, China's embattled real estate giant Country Garden reported losses of approximately $6.7 billion for the first half of this year while warning of possible default.

The company's cash flow problems have ignited fears that it could collapse and spread turbulence through China's economy and financial system.

Agence France-Presse

Stocks advance on fall in bond yields as Nvidia optimism boosts Nasdaq

NEW YORK -- Global stocks mostly rose Wednesday following lackluster economic reports that mitigated worries about further central bank tightening.

The tech-rich Nasdaq enjoyed outsized gains in anticipation of earnings from artificial intelligence player Nvidia.

Analysts said stocks were supported by a drop in yields of the 10-year US Treasury note, which had hit multi-year peaks in recent sessions.

The retreat in yields followed meager purchase managing index data from the United States and Europe, suggesting a slowing economy.

The drop in yields "created a little bit of an opportunity to buy on some of the weakness," said Briefing.com analyst Patrick O'Hare.

All three major US indices climbed, with the Nasdaq jumping 1.6 percent.

European markets closed higher following data showing Britain's economic activity contracting for the first time in six months while the downturn in the eurozone deepened.

Sentiment has taken a hit in recent weeks owing to a spike in US Treasury yields to around 15-year highs, fueled by expectations that a strong economy will force the Federal Reserve to stick to its campaign of monetary tightening.

That has forced investors to push back their expectations as to when borrowing costs will eventually come down -- just a few months ago, they were betting on a cut by the end of the year.

All eyes are on a planned speech Friday by Fed chief Jerome Powell, with dealers hoping for some clarity on its plans to keep inflation on a downward path and confirmation of the central bank's two percent target.

Meanwhile, oil prices fell as the data showing weak economic activity doesn't bode well for demand.

"Today’s disappointing economic numbers on both sides of the Atlantic have cut the rug out from underneath crude oil prices, falling to one-month lows, and down over four percent from their peaks of earlier this month," said Michael Hewson at CMC Markets UK.

Nvidia

Tech shares were also buoyed by hopes that a strong Nvidia report would "get the market back on track," said O'Hare.

The firm's shares have rocketed this year, helping boost many other tech firms, even as traders fret over the impact of higher borrowing costs on their bottom lines.

In results released after Wednesday's closing bell, Nvidia crushed expectations.

The Silicon Valley-based chip company said sales doubled year-on-year to $13.5 billion in the latest completed quarter, leaving a net profit of $6.2 billion -- an eye-watering 843 percent higher than a year before.

Signaling that the boom in AI is still going strong, Nvidia said revenue in its current quarter would ramp up further to $16 billion.

Shares of Nvidia surged more than eight percent in after-hours trading.

Agence France-Presse

Global stock markets slump after US ratings downgrade

NEW YORK — Global stock markets slumped Wednesday after Fitch stripped the United States of its top credit rating, citing a growing federal debt burden and an "erosion of governance."

Fitch's decision Tuesday night to downgrade the United States from AAA to AA+ sparked a fiery rebuttal from the Biden administration.

Treasury Secretary Janet Yellen characterized Fitch's move as "entirely unwarranted," calling it "puzzling in light of the economic strength we see in the United States."

Wall Street's main indices moved lower, with the S&P 500 finishing down 1.4 percent.

Europe's main markets closed with losses of more than one percent.

"Market participants were already contending with the nagging notion that the stock market was overbought on a short-term basis and due for a pullback," said market analyst Patrick O'Hare at Briefing.com.

"It didn't necessarily need another excuse to continue with a consolidation trade, yet Fitch Ratings provided one after Tuesday's close when it downgraded its US credit rating to AA+ from AAA."

Ratings downgrades often mean it becomes more expensive for a government to borrow, but the status of US government bonds, or Treasuries, as a highly liquid safe-haven asset actually saw their yield dip immediately after the announcement.

The yield on 10-year bonds later rose in trading on Wednesday, which traders said was more due to expectations of higher volumes of US borrowing than the Fitch downgrade.

DOWNGRADE 'CHANGES LITTLE' 

Stephen Innes, managing partner at SPI Asset Management, said the downgrade will be "unlikely" to "cause a significant Treasuries sell-off or prompt a major shift in investor behavior mainly because investors experienced a similar downgrade from S&P in 2011 and came away unscathed."

Michael Hewson, chief market analyst at CMC Markets UK, agreed the impact would be minimal.

"The loss of the AAA rating is damaging from a political point of view, but it changes little in the wider scheme of things when it comes to the investability of the US relative to its peers," he said.

"It’s not as if China, or any other country in Europe is any safer when it comes to investability, as well as political stability."

The downgrade follows a long, drawn-out row between Republicans and Democrats earlier this year over raising the US borrowing ceiling, which had fueled fears of a devastating default by the world's top economy.

While a deal was eventually struck, the saga rattled markets and reinforced the sense of long-running deadlock on Capitol Hill that has seen the gears of government jammed up.

In an interview with CNBC, Fitch Ratings senior director Richard Francis pointed to a "pretty steady deterioration in governance over the last couple of decades" in the United States.

Among the elements he highlighted was January 6, referring to the date in 2021 when supporters of Donald Trump stormed Congress in a bid to prevent certification of his rival Joe Biden's election victory.

Other factors, he added, included "constant brinksmanship surrounding the debt ceiling" along with Republicans and Democrats' inability to generate "meaningful, long-term solutions" on fiscal issues surrounding programs like social security and Medicare.

Agence France-Presse

Stock markets jump as US inflation cools

NEW YORK -- Stock markets bounced on Wednesday as data showed US inflation cooled more than expected in June, raising hopes that the Federal Reserve will soon end its cycle of interest rate hikes.

The dollar fell against other major currencies while oil prices jumped, with the international benchmark, Brent North Sea crude, breaching the $80-per-barrel mark.

The Fed and other central banks have been raising borrowing costs in efforts to bring down consumer prices, which jumped as countries emerged from the Covid-19 pandemic and soared further following Russia's invasion of Ukraine last year.

Official data on Wednesday showed the US consumer price index (CPI) rose 3.0 percent from a year ago last month, down from 4.0 percent in May, coming in slightly lower than analysts expected.

While Fed officials have signaled that further rate increases are likely needed to bring inflation back to their two percent target, the June CPI report heightens market doubts about the number of additional increases needed down the line.

The Fed paused its aggressive monetary tightening at its last gathering in June but Chair Jerome Powell has warned that two more hikes were probably needed by the end of the year.

Futures markets still expect a Fed rate hike in July, but not in September.

"The Fed is extremely likely to raise interest rates by another 25 basis points but there's a good chance that it could now be the last," Craig Erlam, analyst at trading platform OANDA, told AFP.

"We're seeing progress across the board at this point, albeit more slowly than many will have hoped, but there's no longer a necessity for the Fed to be so aggressive," Erlam said.

CMC Markets analyst Michael Hewson said that the latest data make clear that "further rate hikes beyond July will be a big ask, and probably won't happen, hence today's US dollar weakness."

Nevertheless, Fed officials would likely continue to adopt a hawkish tone, he said, in order to keep market expectations in line.

Dollar sags

Wall Street stocks spent the entire session in positive territory, with the S&P 500 winning 0.7 percent, while European markets extended earlier gains following the US inflation data.

London equities had already climbed after the Bank of England announced that all major UK retail lenders passed stress tests to assess their resilience to economic shocks.

The pound rose above $1.30 for the first time since April 2022 while the euro also advanced to multi-month highs.

Higher interest rates make a currency attractive to investors looking for higher returns.

Asian equities have meanwhile enjoyed a broadly positive week so far after China signaled a long-running crackdown on the tech sector was nearing an end, while officials also pledged help for ailing real estate developers.

That was followed by reports of further growth-boosting measures and data showing new loans in China had picked up in June thanks to a central bank interest rate cut.

Optimism is now building for more announcements aimed at kickstarting the world's number two economy as its post-Covid recovery sputters.

Agence France-Presse

Asian markets mixed but little joy as traders eye more Fed hikes

HONG KONG - Markets were mixed Thursday, with little buying enthusiasm after minutes from a Federal Reserve policy meeting indicated interest rates will likely keep rising longer than previously feared.

A blockbuster jobs report and sticky inflation data this month have dealt a hammer blow to earlier expectations the US central bank could soon pause its monetary tightening campaign or even cut borrowing costs before year's end.

Several Fed officials have lined up to warn traders they were too optimistic and that with the labour market still strong, rates would need to keep rising until it had weakened and prices were under control.

Minutes from the Fed's February 1 decision reinforced that broad agreement as policymakers try to get inflation down to their target of two percent.

"Participants observed that a restrictive policy stance would need to be maintained until the incoming data provided confidence that inflation was on a sustained downward path to two percent, which was likely to take some time," the minutes said.

"Almost all participants agreed that it was appropriate to raise the target rate for the federal funds rate 25 basis points at this meeting."

And it noted that "a few participants" were in favour of a 50-point increase.

Analysts pointed out that the minutes came before the latest jobs and inflation figures.

National Australia Bank's Taylor Nugent, meanwhile, noted "the absence of any mention of 'disinflation' in the minutes, which contrasts (bank boss Jerome) Powell's press conference where he noted many times that the disinflationary process was underway".

After a healthy rally through January, global markets have rowed back this month as investors come to terms with the higher-for-longer rates narrative and recession fears return.

After Wednesday's sell-off, Asian markets were mixed.

Hong Kong, Shanghai, Sydney, Singapore, Mumbai Bangkok and Manila all fell, though Seoul, Wellington, Taipei and Jakarta edged up.

London dipped at the open, though Frankfurt and Paris edged higher.

"One of our big concerns coming into this year was the market was anticipating an event that wasn't likely to occur, that being a dovish Fed pivot," Oaktree Capital Management's Danielle Poli told Bloomberg Television.

"The market has woken back up a little bit in these last two weeks."

Investors are now awaiting the release of US jobless claims later in the day, which could provide a fresh idea about the strength of the labour market.

Crude prices edged up slightly Thursday but made only a small dent in the losses of at least three percent suffered the day before as the prospect of higher rates and a possible recession drags on demand expectations.

Agence France-Presse

Tokyo stocks end lower on stronger yen

Tokyo stocks ended lower Monday, with exporters hit hard by a stronger yen and investors cautious ahead of a Bank of Japan meeting.

The benchmark Nikkei 225 index was down 1.14 percent, or 297.20 points, to end at 25,822.32, while the broader Topix index lost 0.88 percent, or 16.77 points, to 1,886.31.

The dollar fetched 127.64 yen, against 127.87 yen Friday in New York, firmer than the 129.11 seen in Asia’s Friday trade.

The yen has appreciated rapidly on signs the US Federal Reserve will slow its rate hikes and the Bank of Japan’s decision last month to pivot away from its long-standing ultra-loose monetary policy.

The Japanese central bank said it would loosen its grip on yields and allow those on certain government bonds to move in a wider band.

“Speculation over BoJ policy has helped strengthen the yen, exacerbating fears about worsening profitability, which prompted sell-offs among the export sector including automakers and manufacturers”, IwaiCosmo Securities said in a note.

The BoJ will hold a two-day meeting later this week, with traders speculating on whether it could further tweak its policy.

At the moment, “there are many investors uncomfortable with buying shares, even cheap ones, before seeing the result of the BoJ meeting,” Toshikazu Horiuchi, a broker at IwaiCosmo Securities, told AFP.

Among major shares in Tokyo, SoftBank Group lost 1.31 percent to 5,846 yen, Sony Group slid 1.00 percent to 10,855 yen, and Uniqlo operator Fast Retailing plunged 1.95 percent to 72,050 yen.

Meanwhile, Toyota edged up 0.11 percent to 1,817.5 yen.

Agence France-Presse 

Stocks drop and dollar rises as inflation, rate fears return

HONG KONG - Equities tumbled Thursday, tracking a sell-off on Wall Street, while the dollar jumped further as surging inflation, interest rate hikes and recession fears returned to the fore.

Traders in Europe were keeping tabs on Westminster a day after Prime Minister Liz Truss's government was plunged into a fresh crisis and facing collapse following the resignation of home secretary Suella Braverman.

That came days after the sacking of finance minister Kwasi Kwarteng and has left Truss's premiership on a knife-edge.

The positive start to the week, helped by forecast-beating earnings and a major UK government policy U-turn, gave way to the downbeat mood that has characterized markets all year as traders contemplated an extended period of uncertainty.

News that UK inflation bounced back above 10 percent in September highlighted the struggle central banks have in bringing prices down, despite lifting borrowing costs in recent months.

That followed a similarly glum reading out of New Zealand earlier in the week and helped push up government bond yields around the world, indicating higher interest rates.

The unease on trading floors, and concerns that prices are showing no sign of easing, also sent investors back into the safety of the dollar, adding more inflationary pressure outside the United States and dragging on stock markets.

"As is often the case, rising US yields and the strong US dollar are the sledgehammers pounding global equities lower," said SPI Asset Management's Stephen Innes. 

After Wall Street's drop, markets across Asia were deep in the red, with selling also fuelled by concerns about the Chinese economy as Covid cases spike in the country and leaders stick to lockdown strategies.

A decision to delay the release of third-quarter growth data this week added to the unease among investors.

Hong Kong led losses, shedding almost three percent at one point, while Tokyo, Sydney, Seoul, Wellington, Taipei, Shanghai, Mumbai and Manila were also in the red.

There was a brief rally in the afternoon sparked by a report that China was considering easing quarantine rules for people coming into the country, though traders were unable to maintain momentum.

London's FTSE 100 fell in the morning. Frankfurt was also down but Paris edged up.

The losses wiped out most of the gains enjoyed at the start of the week, even as positive earnings reports came in from Netflix and top Wall Street banks, with Ellen Hazen of F.L.Putnam Investment Management warning worse could be yet to come.

"As we look at third-quarter results, we think there are going to be more misses than the market is currently expecting," she told Bloomberg Radio.

"If you look at GDP for this year, it keeps getting revised downward and it's really hard for companies to keep growing their earnings in the face of that."

On forex markets the dollar briefly broke to as high as 150.08 yen for the first time since 1990, putting pressure on Japanese authorities who said saying they were keeping a close watch on the market and were ready to step in to support the beleaguered currency.

But analysts warned the yen would continue to slide as long as the Bank of Japan refuses to tighten monetary policy at the same time as the Federal Reserve presses on with its sharp rate hikes.

The pound was also back under pressure, having bounced Monday after Britain's new finance minister Jeremy Hunt reversed virtually all of Truss's debt-fuelled, tax-cutting mini-budget that hammered financial markets.

Sterling was hovering just above $1.12 -- against more than $1.14 Tuesday -- owing to the chaos in Westminster, with many of the prime minister's own party calling for her to stand down, while there is speculation that more members of the cabinet could walk.

Oil prices extended Wednesday's rally that came in reaction to a drop in US petroleum stockpiles, and despite President Joe Biden's decision to release 15 million barrels from US strategic reserves.

The crude was the last batch to be released from the 180 barrels pledged by Biden earlier this year, aimed at bringing costs down.

But Innes added: "Markets will mostly ignore further releases from the Strategic Petroleum Reserves -- prices are elevated because of the medium- and longer-term gap between supply and demand resulting from years of oil industry swoon and the resulting low capital expenditure.

"So, the impact of additional... releases will likely have diminishing returns with (reserves) at a multi-decade low."

Key figures around 0810 GMT 

Tokyo - Nikkei 225: DOWN 0.9 percent at 27,006.96 (close)

Hong Kong - Hang Seng Index: DOWN 1.4 percent at 16,280.22 (close)

Shanghai - Composite: DOWN 0.3 percent at 3,035.05 (close)

London - FTSE 100: DOWN 0.2 percent at 6,914.36

Pound/dollar: DOWN at $1.1210 from $1.1219 on Wednesday

Dollar/yen: UP at 149.90 yen from 149.88 yen

Euro/dollar: UP at $0.9794 from $0.9778 

Euro/pound: UP at 87.18 pence from 87.10 pence

West Texas Intermediate: UP 1.5 percent at $86.86 per barrel

Brent North Sea crude: UP 1.2 percent at $93.52 per barrel

New York - Dow: DOWN 0.3 percent at 30,423.81 (close)

Agence France-Presse

Markets sink as US jobs data fan rate hike bets

HONG KONG - Stock markets sank Monday as forecast-beating US jobs data fanned expectations for another big Federal Reserve interest rate hike, while traders are now focusing on an upcoming inflation report.

A brief rally across trading floors last week gave way to gloom as investors grow increasingly worried that central bank efforts to tame runaway prices will plunge the global economy into recession.

Adding to the stress is the upcoming corporate earnings season, which many fear will show that companies are feeling the pain of tightening monetary policies, and fresh China-US tensions.

All three main indexes tumbled Friday -- with the Nasdaq off almost four percent -- following news that a net 263,000 US jobs were created in September.

While that was down from August it was more than expected and showed that the labor market remained robust and highlighted the tough job Fed officials face in their battle against four-decade-high inflation. 

With the spotlight on a consumer price index reading later in the week, policymakers continue to take a hawkish tone, warning they will not ease up on their rate hikes even if that means causing a recession.

Asia tracked the US losses, with Hong Kong down three percent and hefty selling in Sydney, Singapore, Mumbai, Bangkok, Manila, Jakarta and Wellington. 

Shanghai dropped as traders returned from a week-long holiday, with rising Covid numbers in the country leading to worries of more economically painful lockdowns ahead of a key Communist Party gathering.

Chinese tech firms were also hit after Washington on Friday announced new export controls aimed at restricting China's ability to buy and make high-end chips with military applications, adding to tensions between the countries.

London, Paris and Frankfurt all fell in the morning, while Moscow stocks plunged nearly 12 percent following a series of strikes on cities across Ukraine and after the bridge connecting Crimea to Russia was hit by an explosion at the weekend.

Tokyo, Seoul and Taipei were closed.

"The sell-off in equities and the rally in the dollar following Friday's US employment report reflects the concern that the hurdle for a Fed pause is high," said SPI Asset Management's Stephen Innes.

"The rising unemployment rate needed to help bring down CPI inflation will require job losses despite the political fallout that is bound to ensue. Regardless, tightening monetary policy until job losses materialize is on the cards."

He added that there was also nervousness about earnings.

"Unlike June, where earnings were poised to beat expectations, investors are biased towards hitting the sell button as concern around lagged effects of tightening hitting bottom lines now permeate expectations," he said in a note.

The prospect of higher US borrowing costs sent the dollar rallying Friday and it held most of those gains in early Asian trade.

Investors are keeping an eye on the yen, which is edging back to the lows touched last month when the government stepped in with a massive cash injection to support the currency.

The pound weakened even as the Bank of England said it was launching a temporary facility aimed at easing liquidity pressures that arose after the UK government's budget shocked markets last month.

It said it was ready to increase the size of its UK government bond purchases under an emergency measure due to end Friday.

The pound has been hammered -- at one point hitting a record low versus the dollar -- since finance minister Kwasi Kwarteng unveiled a debt-fuelled tax-cutting mini-budget.

Oil prices edged down after seeing their biggest weekly gain since March in reaction to a decision by OPEC and other major producers led by Russia to cut output by two million barrels a day.

The drop Monday came on demand concerns caused by China's Covid flare-ups and more weak data out of Beijing caused by recent lockdowns.

"A slew of weak macroeconomic data that China has released shows that there is very limited room for an economic rebound in the short term, which is hard to provide support for earnings and market confidence," Shen Meng, at investment bank Chanson & Co in Beijing, said.

Key figures around 0810 GMT 

Hong Kong - Hang Seng Index: DOWN 3.0 percent at 17,216.66 (close) 

Shanghai - Composite: DOWN 1.7 percent at 2,974.15 (close)

Tokyo - Nikkei 225: Closed for a holiday

London - FTSE 100: DOWN 0.7 percent at 6,944.90

Pound/dollar: UP at $1.1074 from $1.1082 on Friday

Euro/dollar: DOWN at $0.9703 from $0.9743

Euro/pound: DOWN at 87.62 pence from 87.97 pence

Dollar/yen: DOWN at 145.35 yen from 145.38 yen

West Texas Intermediate: DOWN 0.4 percent at $92.27 per barrel

Brent North Sea crude: DOWN 0.5 percent at $97.44 per barrel

New York - Dow: DOWN 2.1 percent at 29,296.79 (close)

-- Bloomberg News contributed to this story --

Agence France-Presse

Markets drop as Fed hike looms, Putin move lifts dollar and oil

HONG KONG - Stocks fell Wednesday ahead of what many expect to be a third successive jumbo rate hike by the Federal Reserve, while the dollar hit fresh multi-decade highs against the pound and euro after Russia stepped up its war in Ukraine.

Equities around the world have been clattered by fears of a recession in major economies as central banks ramp up borrowing costs to combat the highest inflation in decades, which has been compounded by the Ukraine war and supply chain snarls.

In Washington, the Fed is due to conclude its latest policy meeting, with most analysts predicting it will announce another 75 basis-point lift, though some have tipped a full percentage-point move.

However, while the hike has largely been priced into the markets, the US central bank's forecast and post-meeting comments from boss Jerome Powell are the main attraction for investors.

"Volumes remain light and the mood cautious, with few looking to take on large positions before hearing what the Fed says and where policy makers see rates going by the end of the hiking cycle," Fiona Cincotta, at City Index, said.

"This is what will drive the markets, not the rate hike... but what the Fed plans to do next."

Fed officials have for months stuck to the mantra that they will only ease up on their hawkish drive when inflation comes down and remains subdued.

This has led many to warn that rates are unlikely to come down anytime soon, possibly as late as 2024, with a recession more than likely in the United States as well as other major economies.

DOLLAR EXTENDS RALLY 

Other central banks are also meeting this week. On Tuesday, officials in Sweden surprised markets by unveiling a one percentage-point hike, while the United Kingdom and Switzerland are expected to announce more increases.

Asian markets were back in the red, reversing Tuesday's bounce.

Tokyo, Hong Kong, Sydney and Manila were all down more than one percent, while there were also losses in Shanghai, Seoul, Singapore, Wellington, Taipei, Mumbai and Jakarta.

London rose in early trade, but Paris and Frankfurt were down.

Adding to the dour mood was Vladimir Putin's announcement of a "partial mobilization" as he upped the ante in his battle against Ukraine after his forces were routed from several cities in recent weeks.

He added that he would annex the territories his forces have already occupied and backed weekend referendums in four regions in Russian-held parts of Ukraine.

"We will definitely use all means available" to protect Russian territory, he warned, adding: "That's not a bluff."

The moves mark an escalation of the seven-month war, which has roiled markets and sparked an energy crisis.

Oil prices, which have wilted in recent months owing to worries about demand caused by any recession, surged more than three percent.

And the dollar, a safe haven in times of uncertainty and turmoil and which was already elevated ahead of the rate decision, rallied further.

It hit a fresh 37-year high of $1.1305 against sterling and a new 20-year peak of $0.9885 per euro, with the eurozone already in economic trouble owing to sanctions on Russian oil and Putin's decision to cut off gas supplies to the continent.

The announcement and possible escalation in the war "raises a whole new set of uncertainties", Rabobank's Jane Foley said.

"This is set to weigh on the euro and on the currencies of eastern Europe."

Agence France-Presse

Dollar shines, euro droops as Omicron spreads while Fed hawks circle

TOKYO - The US dollar hovered near the highest since July of last year against major peers on Monday after a Federal Reserve official signaled a first pandemic-era interest rate hike could come as early as March.

The euro sank with the British pound after the Netherlands went into lockdown on Sunday and Britain's health minister declined to rule out the chance of further restrictions before Christmas amid the rapid spread of the Omicron coronavirus variant.

The dollar index, which measures the currency against six major peers, stood at 96.629, not far from the peak at 96.938 reached last month.

The World Health Organization said on Saturday that the number of Omicron cases is doubling in 1.5 to 3 days in areas of the world with community transmission, but noted that much remains unknown about the variant, including the severity of the illness it causes.

On Friday, Fed Governor Chris Waller said an interest rate increase will likely be warranted "shortly after" the bank ends its bond purchases in March.

"Waller gave the (dollar index) a tailwind on Friday," which is now eyeing a new high, but "positioning is skewed long in USDs, so the prospect of position squaring into year-end is elevated," Chris Weston, head of research at brokerage Pepperstone in Melbourne, wrote in a client note.

"While central bank actions are the real issue, headlines on Omicron could be seen as the smoking gun for position squaring."

The greenback, which tends to attract demand as a safe haven, touched its highest since Dec. 15 against the euro, sterling and the risk-sensitive Australian dollar.

The dollar slipped though against fellow haven currency the yen, but still near the middle of the trading range of the past three weeks.

Ten-year US Treasury yields, to which the dollar-yen pair are often closely correlated, languished near a two-week low reached Friday. 

Earlier on Friday, New York Fed president John Williams told CNBC that the Fed will gain "optionality" to raise rates in 2022 by ending bond purchases by March.

Money markets price about 50-50 odds of a quarter point hike by March.

-reuters-

Stocks dip, oil slides and havens shine as growth nerves nag

SYDNEY, Australia - Stock markets slipped on Thursday and safe havens such as government bonds, gold and the yen were supported in Asia, as a hint of uneasiness crept in over the outlook for interest rates and growth, particularly outside of the United States.

Oil prices skidded to a six-week low on concern about a supply overhang and the prospect of China, Japan and the United States dipping into their fuel reserves, with Brent futures last at $79.77, more than 8 percent off last month's three-year high.

The risk-sensitive Australian dollar also fell to a six-week trough of $0.7256.

Japan's Nikkei was down 0.6 percent in early trade. MSCI's broadest index of Asian shares outside Japan dropped 0.5 percent and S&P 500 futures were flat after the index eased a little bit overnight.

The mood was softest in Hong Kong where concern over the earnings outlook weighed on tech stocks and an almost 5 percent drop in heavyweight Alibaba dragged the Hang Seng about 1 percent lower.

"We do seem to have stalled somewhat as we head into the year end," said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney.

"Investors perhaps are just taking a bit of pause," she said, in the wake of a strong US results season, but as inflation and China's slowdown loom as macroeconomic headwinds.

The yen, a safe-haven asset which has also lately been sensitive to oil prices, had its sharpest one-day jump against the dollar in three months on Wednesday while gold rose almost 1 percent and Treasuries rallied along the curve.

Gold rose a further 0.1 percent to $1,869 an ounce in Asia on Thursday. The yen edged up to 113.94 per dollar.

Benchmark 10-year Treasury yields were steady in Tokyo at 1.5889 percent after falling about 5.5 basis points overnight.

The day ahead is quiet on the calendar, with appearances from central bankers in Australia, the United States and Europe and US jobless claims data the highlights.

BIG DOLLAR

Against the backdrop of apparent caution is a surging US dollar, as US data has turned surprisingly strong just as doubts have arisen over the outlook for other major economies.

On Wednesday figures showed a jump in building permits and the backlog of house construction rose to a 15-year high - underscoring strong demand on the heels of a better-than-expected retail sales report on Tuesday.

By contrast Europe is grappling with a fourth wave of COVID-19 cases and fresh restrictions to curb it, while the central bank is pushing back on pressure to raise rates.

The euro has recovered from a trip below $1.13 on Wednesday but remains shaky at $1.1325 and is braced for its worst month on the dollar since June when the Federal Reserve had surprised investors with a hawkish shift in tone.

Currency traders are also assessing a sharp downdraft in the Aussie/yen cross, often a barometer of market sentiment. It fell through its 200-day moving average on Tuesday and has lost almost 4 percent in a dozen sessions.

"You've got the perfect storm there for bears," said Matt Simpson, senior analyst at brokerage City Index. "Fundamentally and technically Aussie/yen looks pretty good with lower oil prices."

(Reporting by Tom Westbrook in Sydney Editing by Shri Navaratnam)

-reuters-

Asian stocks on hold for Lunar New Year, bitcoin eyes record highs

TOKYO/NEW YORK - Asian shares hovered just below a record high on Friday as mixed US economic data caused some investors to show restraint after a global stock market rally pushed many bourses to dizzying heights.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.05 percent, trading just shy of an all-time high reached in the previous session. Australian stocks lost 0.63 percent. Shares in Tokyo fell 0.2 percent, pulling back from 30-year highs.

Futures for the S&P 500 declined 0.12 percent. Euro Stoxx 50 futures were up 0.03 percent, German DAX futures slipped 0.14 percent, and FTSE futures eased 0.13 percent, pointing to a subdued start to European trading.

Markets in Greater China and most of Southeast Asia are closed on Friday for the Lunar New Year holiday. China’s stock and bond markets, foreign exchange and commodity futures markets are closed through Feb. 17 for the holiday.

Bitcoin surged to a new record high after BNY Mellon said it would offer custodian services for cryptocurrencies. The dollar headed for a weekly loss, stung by bitcoin’s assent and disappointing U.S. economic data.

Trading in the United States and Europe on Thursday did not move prices enough to provide much direction, said Tom Piotrowski, a market analyst at CommSec in Sydney.

“We didn’t get much of a lead-in from the northern hemisphere,” Piotrowski said. “Markets are in a bit of a holding pattern waiting for the next catalyst and it is just a question of whether that catalyst is going to be a positive one or a negative one.”

World stock markets were holding close to record highs on Thursday as investors weighed some tepid economic data against increasing vaccinations against COVID-19 and the prospect that more government spending and continued cheap money from central banks will drive higher growth and, eventually, inflation.

The MSCI world equity index, which tracks shares in 49 countries, fell 0.03 percent on Friday, also pulling back from a record high.

On Wall Street, the Nasdaq and S&P 500 eked out gains of 0.4 percent and 0.2 percent, respectively, while the Dow Jones Industrial Average slipped 0.02 percent.

Prices held near records as investors bet on more government spending, although enthusiasm was tempered when U.S. President Joe Biden said that China was poised to “eat our lunch,” raising fears of renewed strain on Sino-U.S. ties.

U.S. weekly unemployment claims fell less than expected and core consumer prices rose at a slower pace, which caused some traders to temper the optimism about the economic outlook.

Bitcoin reached a record high of $49,000 before erasing gains.

BNY Mellon’s announcement that it will help clients hold, transfer and issue digital assets came just days after Elon Musk’s Tesla revealed it had bought $1.5 billion worth of the cryptocurrency and would accept it as a form of payment for its cars.

Spot gold fell 0.17 percent to $1,822.21 per ounce. U.S. gold futures fell 0.14 percent to $1,829.50. Gold prices are still on track for their best week in three amid broad dollar selling.

The dollar index edged up by 0.05 percent on Friday but was still on course for a 0.6 percent weekly decline.

Soft demand at an auction of $27 billion of new 30-year Treasuries on Thursday rattled bond investors.

The yield on 10-year U.S. Treasuries rose to 1.1599 percent. The 30-year yield initially rose but then fell back to 1.9398 percent.

Brent crude fell 0.57 percent to $60.79 a barrel, having dropped half a percent the previous session. U.S. oil fell 0.64 percent to $57.88 a barrel, after falling by 0.8 percent on Thursday.

OPEC cut its demand forecast and the International Energy Agency said the market was still oversupplied, which cast a gloom over energy markets.

-reuters-

Asia shares mostly lower amid rising coronavirus cases, Washington turmoil

NEW YORK - Asian stocks were mostly lower on Tuesday, tracking Wall Street declines as political turmoil in Washington and rising coronavirus cases worldwide weighed on sentiment ahead of the start of the quarterly earnings season.

Political uncertainty dominated trading as House Democrats introduced a resolution to impeach U.S. President Donald Trump, accusing him of inciting insurrection following a violent attack on the Capitol last week.

Several big tech giants, including Twitter Inc, Amazon.com Inc , Alphabet Inc, Facebook Inc and Apple Inc, have taken actions against Trump and his network of supporters, as concerns mounted over the risk of continued violence.

Twitter’s stock tumbled 6.4 percent on Monday after the micro-blogging site permanently suspended Trump’s account last Friday.

Investors also kept an eye on the continued spread of the coronavirus globally as cases surpassed 90 million on Monday, according to a Reuters tally.

“The weakness was led by tech and I think the banning of Trump’s account by Twitter and Amazon stepping up against Parler all brought a renewed focus on increased regulation and reining in on tech,” said Thomas Hayes, chairman of Great Hill Capital in New York.

Japan’s Nikkei slipped 0.48 percent, South Korea’s KOSPI fell 0.91 percent and Hong Kong’s Hang Seng index futures lost 0.54 percent.

Defying the broader selloff, Australia’s S&P/ASX 200 rose 0.24 percent.

On Wall Street, the Dow Jones Industrial Average fell 0.29 percent, the S&P 500 lost 0.66 percent and the Nasdaq Composite dropped 1.25 percent.

Investors are expecting guidance on the extent to which executives see a rebound in 2021 earnings and the economy from results and conference calls from JP Morgan, Citi and Wells Fargo Friday.

Meanwhile, longer-term Treasury yields were at their highest since March before new long-dated supply coming this week and on speculation of more U.S. fiscal stimulus as Democrats will have control of Congress and the White House.

“People are optimistic to see the yield curve steepening and it could help spreads and net interest margins for banks,” Hayes said.

Benchmark 10-year notes last fell 11/32 in price to yield 1.1443 percent, from 1.107 percent late on Friday.

The spread between the two-year and 10-year Treasury yields brushed against 100 basis points to hit its steepest since July 2017.

The climb in yields in turn offered some support to the dollar, which rose to its highest in over two weeks against a basket of currencies.

The U.S. dollar index rose 0.256 percent, with the euro down 0.54 percent to $1.2152. The Japanese yen weakened 0.24 percent versus the greenback at 104.20 per dollar, while Sterling was last trading at $1.3516, down 0.35 percent on the day.

Crude oil prices fell, hit by renewed concerns about global fuel demand amid tough coronavirus lockdowns across the globe, as well as the stronger dollar.

U.S. crude recently fell 0.1 percent to $52.19 per barrel and Brent was at $55.61, down 0.68 percent on the day.

Safe-have spot gold dropped 0.2 percent to $1,844.27 an ounce. Silver fell 1.70 percent to $24.94.

-reuters-

Equities stutter on economy, second wave fears

HONG KONG - Equities and oil sank Friday while the dollar rallied as investors ran for the hills following the worst Wall Street rout since March, fuelled by worries about the economic recovery and a second virus wave in the US.

And the magnitude of the financial earthquake caused by the crisis was brought home by data showing the British economy shrank 20.4 percent month-on-month in April.

World markets have blasted higher since hitting a deep trough three months ago, supported by trillions of dollars in government and central bank help and an easing of lockdown measures.

But the optimism on trading floors was shattered Wednesday when Federal Reserve boss Jerome Powell signalled the world's top economy would take some time to bounce back from the crisis.

While his comments, and the bank's decision to keep interest rates at near zero for at least two years, was expected, the dose of reality jolted traders.

That coincided with figures showing a spike in new infections in key states including Texas, California, Arizona and Florida, which fanned concerns of a new wave as the nation slowly reopens.

However, Treasury Secretary Steven Mnuchin said there would be no more shutdowns, telling CNBC: "I think we've learned that if you shut down the economy, you're going to create more damage."

"Investors have been arguing in recent weeks that the stock market performance and economic reality have been disconnected, wondering when reality might hit the market," said JP Morgan Asset Management strategist Tai Hui. 

"The fear of a rising rate of COVID-19 infections is the most important driver in our view for this sell-off."

Hong Kong, Sydney, Mumbai, Singapore, Jakarta and Bangkok all fell between one and two percent while Wellington and Seoul were more than two percent lower. Tokyo finished 0.8 percent lower and Shanghai was slightly off.

London opened more than one percent lower after the GDP figures were released, while Paris and Frankfurt were also lower.

Still, the losses were shallower than earlier in the day and much lighter than on Wall Street on Thursday, where all three main indexes were routed.

The correction that was needed?

Analysts also blamed profit-taking after the huge run-up since March, which has seen some indexes rise more than 50 percent, with many saying investors had run ahead of themselves on hopes for a V-shaped recovery.

"There is an argument to be made that equities were due a decent correction in light of the gains made in the past three months," said David Madden of CMC Markets.

"On the other hand, economies can't stay locked down forever so a jump in the infection rate is going to be the cost of trying to get things back to normal."

The world equities retreat was reflected in oil markets, with both main contracts tumbling more than eight percent Thursday, hit by uncertainty over demand and data showing a jump in US stockpiles.

And the losses continued into Friday, weighing on energy giants in the region.

The dollar, under pressure for weeks owing to the huge Fed easing measures and the return of risk-taking, rallied as investors sought its safe-haven status. The greenback was up more than one percent against the Canadian, Australian and New Zealand dollars as well as Indonesia's rupiah.

It also jumped more than two percent against the Mexican peso and South African rand.

"Who knows whether this is just the 'correction we had to have' or the start of something more serious," said National Australia Bank's Ray Attrill.

"Certainly though, we don't doubt the ongoing power of central bank policy actions -- from the Fed in particular -- in continuing to place a floor under risk assets relative to the underlying economic fundamentals on which stock prices are supposed to be based."

Agence France-Presse

Oil and European shares rise as lockdowns ease, gold jumps

LONDON - European stock markets rose on Monday and oil prices climbed to their highest in as much as two months as a loosening of coronavirus shutdowns boosted market sentiment, even though the deadly outbreak has yet to be fully contained.

Warm weather enticed much of the world to emerge from coronavirus lockdowns as centers of the outbreak from New York to Italy and Spain gradually lift restrictions that have kept millions cooped up for months.

However, the weekend also saw anti-lockdown protesters in countries such as the United States, Germany, England and Poland arguing government restrictions demolish personal liberties and are wrecking economies.

The pan-European STOXX 600 was up 2% at 1020 GMT, with heavyweight bourses in Britain, Germany and France all comfortably in positive territory, recovering some of last week's losses.

"The resilience of stock markets relative to the awful economic data that we’ve been seeing over the past fortnight speaks to an optimism that... as economies come out of lockdown we can expect to see improvements as we head into the second half of the year," said Michael Hewson, chief market analyst at CMC Markets.

Governments must balance the economic incentive to re-open businesses with the risk of triggering a deadly second wave of the virus, which has killed more than 312,000 people and spread to at least 210 countries since December.

Deutsche Bank strategist Jim Reid said, "It does feel like we’re in the middle of a phoney war at the moment with all of us waiting to see how efficiently the various economies are able to re-open given all the social distancing that will be required."

There were still lots of obstacles to a rapid recovery, with Federal Reserve Chairman Jerome Powell saying in an interview on Sunday that a U.S. economic recovery may stretch deep into 2021.

The most important data for the U.S. economy now are the "medical metrics" around the coronavirus pandemic, he said.

Health ministers from around the world, including China and the U.S., are expected to call for an independent evaluation of the World Health Organization's handling of the COVID-19 pandemic during a WHO meeting on Monday.

Already rocky U.S.-China relations also saw tensions increase over the weekend, as the United States raised threats over telecoms equipment giant Huawei Technologies and China's treatment of journalists in Hong Kong.

U.S. lawmakers and officials are crafting proposals to push American companies to move operations or key suppliers out of China, including tax breaks, new rules, and carefully structured subsidies.

Japan's preliminary GDP data showed that the world's third biggest economy contracted an annualised 3.4% in the first quarter, slipping into a recession for the first time in more than five years.

But hopes of a worldwide economic recovery saw oil prices climb by more than $1 a barrel on Monday, supported by output cuts.

Brent crude reached as much as $34.35 a barrel on Monday, its highest since April 9, and was last up 5.3% at $34.22 . U.S. West Texas Intermediate crude was up 7.1% at $31.51 a barrel - a two-month high.

In commodity markets, the flood of liquidity from central banks, combined with record-low interest rates and poor economic data from the U.S., lifted gold to a seven-year peak. The metal was last up 1.3% at $1,763 an ounce, with silver and palladium also boosted.

The MSCI world equity index, which tracks shares in 49 countries, was up around 0.4% while MSCI's main European Index was up 2%.

Government bond yields edged higher across the euro area, while France's bonds saw some underperformance after its ratings outlook was lowered by Fitch Ratings.

Europe's biggest budget airline, Ryanair, reported a 13% rise in profit for the year to March 31, but cut its annual passenger traffic target by a further 20% and said it had "no visibility" on customer demand once it reopens much of its network on July 1. Ryanair shares were last up 10.4%.

The dollar fell slightly against a basket of six major currencies in early London trading before recovering somewhat, last down less than 0.1% since New York's close.

The Norwegian crown was lifted by the rising oil prices, up around 0.8% versus the euro.

Sterling fell below $1.21 - its lowest since March 26 - late on Sunday after the Bank of England's chief economist said the bank is looking more urgently at options such as negative interest rates.

It was last up 0.25% on the day at $1.2130, as a lack of progress in Brexit negotiations continue to weigh on the pound.

(Reporting by Elizabeth Howcroft; Editing by Toby Chopra and Peter Graff)

-reuters-

Asia stocks set to rise after Wall Street gains on oil rebound

WASHINGTON -- Asian equity markets were poised to edge higher on Thursday after rebounding crude prices and the promise of more US government aid to ease the economic pain inflicted by the coronavirus crisis helped calm global equity markets.

Better-than-expected US corporate earnings also lifted equities, analysts said, prompting investors to edge out of perceived safe-haven assets like US Treasuries on Wednesday.

Australian S&P/ASX 200 futures were up 0.94 percent at 20:59 GMT (4:59 a.m. in Manila), while Japan's Nikkei 225 futures were down 0.18 percent.

The Nikkei 225 index closed down 1.97 percent at 19,280.78​​​ on Wednesday. The futures contract is up 0.15 percent from that close.​ Hong Kong's Hang Seng index futures rose 0.13 percent.

On Wall Street, all 11 S&P 500 sector indexes traded higher as the US Senate unanimously approved the new relief package, adding to trillions of dollars in stimulus that have helped Wall Street rebound from its March lows.

The House of Representatives is expected on Thursday to clear the relief, which would be the fourth coronavirus measure passed by Congress, and would boost the overall federal financial response to almost $3 trillion.

In Europe, traders were buoyed after Italy breezed through a major debt sale on Tuesday and speculation continued that the European Central Bank would provide more support measures.

Still, it may take European Union countries until the summer if not longer to agree on how to finance aid to help economies recover from the pandemic as major disagreements persist, a bloc official said on Wednesday.

Brent oil rose more than 7 percent, after earlier in the day touching its lowest level since 1999, on the prospects for further production cuts to reduce the glut in the oil market, sending the S&P 500 energy index up 3.6 percent.

US crude was trading up 4.72 percent to $14.43 per barrel.

Dozens of vessels have been booked in recent days to store at least 30 million barrels of jet fuel, gasoline and diesel at sea, as on-land tanks are full or already booked, according to traders and shipping data reviewed by Reuters.

US storage onshore is swiftly filling, with inventories now at 518.6 million barrels, not far from an all-time record.

On Wall Street, the Dow Jones Industrial Average rose 456.94 points, or 1.99 percent, to 23,475.82, the S&P 500 gained 62.75 points, or 2.29 percent, to 2,799.31 and the Nasdaq Composite added 232.15 points, or 2.81 percent, to 8,495.38.

Shares of US-listed Chinese companies may face headwinds after the head of the US securities regulator warned investors against putting money into Chinese companies due to ongoing governance issues with their disclosures.

MSCI's gauge of stocks across the globe gained 1.78 percent following a broad rally in Europe.

The dollar index rose 0.259 percent, with the euro down 0.13 percent to $1.0808.

The Canadian dollar fell 0.14 percent versus the greenback at 1.42 per dollar after the nation's death toll from the coronavirus rose by less than 10 percent for the third day in a row, data showed on Wednesday, and some provinces prepared to start lifting shutdowns imposed to fight the outbreak.

Gains in the oil market helped draw investors into riskier assets, pulling government bond yields higher.

Benchmark 10-year notes last rose 4/32 in price to yield 0.6175 percent, from 0.619 percent.

-reuters-

Asia shares off to cautious start, US crude slides

SYDNEY -- Caution gripped Asian share markets on Monday on expectations a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdown, while US crude prices took an early spill.

Japan reported its exports fell almost 12 percent in March from a year earlier, with shipments to the U S down over 16 percent. Early readings on April manufacturing globally are due on Thursday and are expected to show recession-like readings.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.2 percent in slow early trade, with a pause needed after 5 straight weeks of gains. Japan's Nikkei fell 1.3 percent and South Korea 0.1 percent.

E-Mini futures for the S&P 500 slipped 0.7 percent, having jumped last week on hopes some US states would soon start to re-open their economies.

US President Donald Trump said Sunday that Republicans were "close" to getting a deal with Democrats on a support package for small business.

But the US Centers for Disease Control and Prevention reported an increase of 29,916 in new infections and said the number of deaths had risen by 1,759 to 37,202.

The S&P 500 has still rallied 30 percent from its March low, thanks in part to the extreme easing steps taken by the Federal Reserve. The Fed has bought nearly $1.3 trillion of Treasuries alone, and many billions of non-sovereign debt it would historically have never gone near.

"The Fed will be a major buyer of risky assets in the coming months, and has displayed its willingness to backstop virtually any part of the domestic financial system in trouble," said Oliver Jones, a senior markets economist at Capital Economics.

Yet the particular composition of the S&P 500 was also a major factor, he added, as three sectors relatively resilient to a virus-induced lockdown -- IT, communications services and healthcare -- make up around 50 percent of the index.

Indeed, Microsoft, Apple, Amazon, Alphabet and Facebook account for more than a fifth of the index.

"What's more, the S&P 500 is skewed towards a few ultra-large firms, some of which are also in those sectors. Their sheer size might make them better able to weather a few months of dramatically-low revenues than most."

The rebound in the S&P 500 therefore likely overstated optimism on the economy, Jones argued, noting European benchmark equities indices and US small cap indices were still in bear market territory.

Bond markets suggested investors expected tough economic times ahead with yields on US 10-year Treasuries steady at 0.65 percent, from 1.91 percent at the start of the year.

That decline has shrunk the US dollar's yield advantage over its peers and left it rangebound in recent weeks. So far in April, the dollar index has wandered between 98.813 and 100.940 and was last at 99.791.

The dollar was a fraction firmer on the yen on Monday at 107.63 but again well within recent ranges, while the euro idled at $1.0868.

Gold had recoiled to $1,676 per ounce, having touched a 7-1/2 peak of $1,746.50 last week.

Oil prices remained under pressure as the global lockdown saw fuel demand evaporate, leaving so much extra supply countries were finding it hard to find space to store it.

So great was the near-term glut that the May futures contract for US crude was trading down 7 percent at $16.96 a barrel , while June was standing at $24.28.

Brent crude futures have already rolled over into June and that contract was off 32 cents at $27.75 a barrel.

-reuters-