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 U.S. crude moved back above $30 a barrel and global benchmark Brent
rose 52 cents to $33.24 after Russia reiterated its openness to
talking with OPEC about output cuts - but only after a third
consecutive day of oil price losses in Asia had weighed on regional
stock markets.
Wall Street, however, looked set to open about 0.2 percent higher,
according to index futures.
Oil prices, down 70 percent in the last 18 months as investors have
fretted about global growth and an economic slowdown in China, have
been a major factor behind a torrid start to the year for stocks.
The pan-European FTSEurofirst 300 index is down nearly 10 percent
this year while the U.S. S&P 500 has lost 6.9 percent.
Market turmoil has in turn boosted expectations of further central
bank stimulus measures. The Bank of Japan (BOJ) last week became the
latest major central bank to introduce negative interest rates. Many
in markets expect the European Central Bank (ECB) will ease policy
further next month.
"There is still a lot of vulnerability in stock markets and the euro
remains quite strong, which is adding pressure on the ECB to take
action," BNP Paribas European rate strategist, Patrick Jacq said.
The FTSEurofirst 300 stocks index fell 0.3 percent on Wednesday, hit
by weak earnings reports, although Swiss seeds and pesticides group
Syngenta rose 6 percent after ChemChina agreed to buy the company
for $43 billion.
Germany's DAX index slid 1 percent and Britain's FTSE 100 was
off 0.5 percent.
Data on Wednesday showed euro zone businesses had a disappointing
start to 2016, with growth in January matching the worst seen last
year.
On Wednesday, MSCI's broadest index of Asia-Pacific shares outside
Japan fell 1.7 percent.
Japan's Nikkei <.N225> closed down 3.2 percent, hit by weak oil and
a strong yen, wiping out almost all the gains it made after the BOJ
became the latest major central bank to introduce negative interest
rates.
Chinese shares dipped 0.4 percent.
Stock market weakness has driven investors into the shelter of
low-risk government debt. Two-year yields on bonds from euro zone
benchmark issuer Germany and Japanese five- and 10-year yields hit
record lows on Wednesday.
Yields on 10-year U.S. Treasury bonds hit 10-month lows on Tuesday.
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Germany sold nearly 4 billion euros of five-year binds at a record
low yield at auction of -0.24 percent.
"Record low yields don't appear to be giving people a headache and
at the margin the auction is supportive for the ECB to do what is
currently expected, which is a 10 basis point cut in the deposit
rate next month," said Commerzbank rate strategist David Schnautz.
German 10-year yields were last flat on the day at 0.31
percent.
YEN FAVORED
In currency markets, the Japanese yen <JPY=>, which tends to be
bought by investors in times of risk aversion, was 0.4 percent
stronger on the day at 119.58 per dollar. It hit a six-week low of
121.70 per dollar after the BOJ's policy meeting on Friday.
"Risk sentiment is pretty fragile, so we are seeing yen being
supported," ING currency strategist Petr Krpata said.
The Chinese yuan weakened to a three-week low against the dollar,
hurt in part by expectations of a major currency transaction for
ChemChina's bid for Syngenta.
The euro was flat at $1.0917 while sterling, which touched a
three-week high on Tuesday after European Council President Donald
Tusk presented proposals to keep Britain in the European Union,
firmed 0.6 percent to close to $1.45, a three-week high.
Gold, also viewed as a safe-haven by investors, held close to
three-week highs. It last traded at $1,127.50, flat on the day.
(Additional reporting by Hideyuki Sano in Tokyo, Dhara Ranasinghe,
Sudip Kar-Gupta and Anirban Nag in London; Editing by Mark Heinrich)
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