(Updates with price action at the European open, fresh quotes)
* Graphic: World FX rates http://tmsnrt.rs/2egbfVh
* Graphic: Global asset performance http://tmsnrt.rs/2yaDPgn
* European shares at two-week high
* US stock futures higher
LONDON, Aug 29 (Reuters) – World stocks rallied on
Monday, with sentiment supported by China’s efforts to shore up
its battered markets and lift confidence towards the world’s
No.2 economy.
Europe’s broad STOXX 600 index hit a two-week high,
a day after posting its biggest one-day jump in about a month on
China hopes. London’s blue-chip FTSE rallied over 1%,
playing catch-up after Monday’s UK public holiday, while U.S.
stock futures suggested a firm open for Wall Street later on
.
All this followed a 1% gain in MSCI’s broadest index of
Asia-Pacific shares outside Japan and a 2% rally
in Hong Kong stocks.
Beijing at the weekend introduced a slew of measures to
shore up the market, such as halving stock trading stamp duty,
loosening margin loan rules and putting the brakes on new
listings.
This has offered some respite to equity markets, rattled
this month by fresh strain in China’s property market as well as
renewed selling in the U.S. Treasury market.
Latest news however suggested China would remain a source of
global market volatility.
China’s largest private property developer Country Garden
Holdings is seeking to add a 40-day grace period for
the repayment of a 3.9 billion yuan private
onshore bond due on Saturday, a document seen by Reuters showed.
And pressure remained on China Evergrande. The
builder which once traded above HK$30 a share, fell 10% to
HK$0.31 in its second session back from suspension, highlighting
the heavy doubts that remain over the country’s debt-stricken
property sector.
“September will reveal the true underlying sentiment in
markets,” said Nordea chief markets strategist Jan von Gerich.
“There has been an initial jump in markets but these are
still fine tuning measures and won’t satisfy expectations for
something bigger in terms of stimulus.”
BIG WEEK
Attention also turned to key monthly U.S. jobs data released
at the end of the week. Job openings figures are due later on
Tuesday and may offer some clues.
“There’s anticipation of a bit of a slowing in the labour
market and cooling of the inflationary pulse,” said Ryan
Felsman, senior economist at brokerage CommSec in Sydney.
Speaking at last week’s Federal Reserve annual symposium at
Jackson Hole, Fed chief Jerome Powell said the U.S. central bank
may need to raise interest rates further to ensure inflation is
contained.
Ten-year U.S. Treasury yields are up 23 basis points this
month and set for their biggest monthly jump since February as
investors positioned for a higher for longer rates scenario.
On Tuesday, 10-year yields drifted lower and were last down
3 bps to 4.17%, while two-year yields were down 2
basis points (bps) to 4.98%.
In currency markets, the euro was little changed at around
$1.0809 and holding above 2-1/2 month lows hit last
week.
The yen remained pinned near Monday’s 10-month low
at around 146.75, for a loss of some 10% on the dollar this
year.
Traders are wary that its weakness might soon prompt
government intervention, and at 146.40 per dollar it was barely
moved by a government report suggesting an inflection point in
the country’s years-long battle with deflation.
In commodities, Brent crude futures were flat at
$84.47 a barrel.
European gas prices might be set for a volatile session on a
deepening standoff over pay and conditions at Australian gas
rigs, with workers planning stoppages from next week. Benchmark
Dutch prices are up 40% for August so far.
(Reporting by Dhara Ranasinghe in London and Tom Westbrook in
Singapore; Editing by Sharon Singleton)
