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 Asian bourses had seen gains overnight including almost 3 percent
for Tokyo's Nikkei. But the mood faltered shortly after Europe
opened as weak company results from the likes of Nestle compounded
other sentiment-sapping factors.
London's FTSE lead the way down with a 0.7 percent fall as its
miners dipped in tandem with oil and the political pressure mounted
on sterling too as talk of 'Brexit' risk swirled. [FRX/]
British Prime Minister David Cameron will discuss a final draft
agreement when he meets the other EU leaders on Thursday evening.
Summit chairman Donald Tusk is hoping to reach a deal that will
enable Cameron to return to London on Friday and campaign for
Britain to stay in the EU in a referendum on the issue expected in
June.
"There will not be a better time for a compromise," wrote Tusk, a
former prime minister of Poland. "It is our unity that gives us
strength and we must not lose this. It would be a defeat both for
the UK and the European Union, but a geopolitical victory for those
who seek to divide us."
The bigger force for markets appeared to still be oil, however.
Wednesday had seen a more than 7 percent jump in Brent on hopes that
big producers will cap output. And though the rally had lost
momentum, prices were holding their ground.
Brent futures hovered at $34.71 a barrel after hitting an
intraday high of $34.99, while U.S. crude steadied at $31.25 a
barrel.
"The correlation between oil and equities is still pretty high,"
said Societe Generale strategist Alvin Tan.
"It is true to say sentiment remains pretty fragile. We have had
this big rally in oil since the Doha deal. That has dipped a little
bit and market is now groping a little bit for the next move."
Late on Wednesday, Standard and Poor's delivered the latest blow to
oil producers as it downgraded Saudi Arabia, Brazil, Kazakhstan,
Bahrain and Oman's credit ratings.
The impact was felt almost immediately in Oman as borrowing costs
jumped at an auction of government bonds.
BULLARD LESS BULLISH
In the currency markets the more subdued mood saw the safe-have yen
kick higher again, while the Australian dollar was the biggest loser
following a larger-than-expected rise in unemployment.
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The euro was waiting on the minutes of the European Central Bank's
last meeting, when it signaled it was readying another round of
easing measures and U.S. dollar dipped on dovish comments from a top
Fed official.
It would be "unwise" for the central bank to continue hiking rates
given declining inflation expectations and recent equity market
volatility, St. Louis Fed President James Bullard said late on
Wednesday, in comments that mark a stark change of direction for one
of the Fed's most hawkish members.
Despite the uncertain start in Europe, there was still a whiff of
risk appetite around as lower-rated southern euro zone bonds made
ground in the debt markets.
Overnight, MSCI's broadest index of Asia-Pacific shares outside
Japan jumped 1.9 percent. Tokyo's Nikkei gained 2.8 percent,
shrugging off the biggest drop in domestic exports since 2009.
Australian shares climbed 2.2 percent and South Korea's KOSPI added
1.1 percent, though Shanghai stocks dipped in a muted reaction to a
rise in inflation.
"Recovering oil prices have set the stage for an accelerated rebound
in global stocks, while minutes from the FOMC supported the mood,"
said Rhoo Yong-seok, a stock analyst at Hyundai Securities.
Spot gold was nearly flat at $1,2089.00 an ounce. The precious
metal had managed to snap a three-day losing streak on Wednesday
after the Fed's meeting minutes showed policymakers had considered
altering their rate hike path.
(Reporting by Marc Jones; Editing by Hugh Lawson)
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