INSUBCONTINENT EXCLUSIVE:
London: World markets calmed after signs of movement in the US-China trade stand-off and ahead of major central bank meetings on Thursday,
including emerging market trouble spot Turkey.
Shanghai, Tokyo, Jakarta stocks all gained around 1 per cent and Hong Kong's Hang Seng
finished up 1.8 per cent as China’s yuan also edged higher in the currency markets.
News that US President Donald Trump's administration
had reached out to Beijing for a new round of trade talks had helped Asia rally after several torrid weeks that has included the region's
longest losing streak since 2000.
Washington's invitation got the thumbs-up from Beijing and follows threats from Trump to impose tariffs on
practically all imports from China in the absence of concessions.
Europe moved higher too, with 0.2-0.6 percent rises for German, French,
Italian and Spanish shares offsetting a weaker FTSE in London which was dragged down by struggling oil and tobacco stocks.
It helped MSCI's
47-country world index toward a fourth day of gains and futures markets pointed to Wall Street inching up again too when it reopens.
"There
have been a lot of obvious headwinds to risk appetite over the summer," said State Street Global Markets' head of global macro strategy
Michael Metcalfe.
"I just get the sense this week we are beginning to see some light through the clouds."
In the currency market, the dollar
began to nudge higher again having been dampened by Wednesday's soft US wholesale price data, which had undermined the case for a faster
pace of interest rate hikes by the Federal Reserve.
US producer prices unexpectedly fell in August, recording their first drop in 1-1/2
years and denting talk of accelerating inflation following last week's strong jobs and wage data.
The euro hovered around $1.1620, having
gained around 0.6 percent so far this week
The yen weakened 0.2 per cent to 111.47 per dollar as the trade optimism sapped safe-haven demand.
Sterling held near a six-week high of
$1.3087 as Brexit-supporting lawmakers in British Prime Minister Theresa May's party publicly pledged support for her to stay in power.
The
European Central Bank and the Bank of England hold policy meetings on Thursday, but both are widely expected to leave interest rates
unchanged, though the ECB could confirm when exactly it will end its stimulus programme.
TALKING TURKEY
Attracting more attention is a
policy meeting by the Turkish central bank, which is expected to raise its interest rates sharply at 1100 GMT to shore up its battered
lira.
The lira has lost more than 40 per cent of its value against the dollar this year, hit by worries over President Tayyip Erdogan's grip
on monetary policy and by a diplomatic spat between Ankara and Washington
It took a 3 per cent dive again as Erdogan called for a rate cut rather than a hike and blamed the central bank for the spike in inflation
which is now almost 20 per cent.
The lira crisis has also spread to some other emerging market countries with weak economic fundamentals
such as sizeable current account deficits.
"In theory, what the Turkish central bank does shouldn't impact other markets
However, if it's an example of an EM central bank reaffirming its credibility, then you could get some positive contagion from it," State
Street's Metcalfe said.
The lira was last down 2 percent at 6.48 per dollar, albeit still well off its record low of 7.240 reached a month
ago.
Among commodities, oil prices fell, reversing some of the strong gains from the previous session, as economic concerns raised doubts
about fuel demand growth.
Brent futures hit $80 per barrel on Wednesday, but eased in early London trading to $79, down 0.8 percent on the
day.
Most euro zone government bond yields were little changed meanwhile, with the market largely sidelined ahead of the European Central
Bank meeting.
Italy's debt market was the outlier, with yields there rising ahead of a sale of up to 7.75 billion euros of bonds.
"Our sense
is that we will get a dovish press conference from Draghi," said Dean Turner, an economist at UBS Wealth Management in London.
