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 European stocks <0#.INDEXE> reversed some of the previous day's
gains and safe-haven German <DE10YT=TWEB> government bonds were in
demand as the region opened, but there was some respite for
commodities and their related currency and share markets.
Brent oil <LCOc1>, which has slumped more than 20 percent over the
last month, was up almost 1 percent. Copper <CMCU3>, seen as a
bellwether of global growth, nudged off a six-year low and Chinese
stocks <.CSI300><.SSEC> bounced 3 percent.
The dollar also helped relieve the pressure, with it pegged back by
another bout of weak U.S. data on Monday. Raw material reliant
Canadian <CAD=> and Australian dollars <AUD=D4> both got lifts,
alongside Russia's rouble <RUB=> and other emerging FX.
The Aussie dollar was by far the biggest mover. It rose 1.25 percent
to an almost two-week high of $0.7375 after a major change in tone
from its central bank that suggested it was now more satisfied with
the currency level.
 "You have had a key shift from the RBA that they don't need to
intervene as strongly, so that has triggered a considerable Aussie
bounce," said John Hardy, head of FX strategy at Saxo Bank.
"And the (U.S.) dollar view is just flat and we are just waiting for
payrolls on Friday. We have had a relatively hawkish set-up from
Yellen and co (that interest rates may go up next month) but the
rates market just doesn't believe it."
The dollar edged down about 0.1 percent on the day against its
Japanese counterpart to 123.90 yen <JPY=>, while the euro was
slightly higher at $1.0958 <EUR=>.
European stock markets lost ground, with French bank Credit Agricole
<CAGR.PA> and German carmaker BMW <BMWG.DE> among the worst
performers after reporting disappointing results and as the recent
drop in oil prices weighed on energy stocks.
Shares in Greece, which had slumped 16 percent on Monday after
re-opening following a five-week shutdown, also added to weak mood
as they fell a further 4 percent. DATA DEPENDENT
MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> had turned positive and extended gains late in the
session as China shares rose while Japan's Nikkei stock index
<.N225> kept losses to 0.14 percent.
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The Shanghai Composite Index <.SSEC> ended more than 3.5 percent
higher and the CSI300 index <.CSI300> added 3.1 percent in a third
day of gains.
Beijing has taken a raft of steps to support Chinese share markets
after they lost more than 30 percent of their value since peaking in
June, but investors are still cautious.
"The market is still very volatile ... investors are likely to be
quiet and see what the next step of the government will be," said
Patrick Yiu, a director of CASH Asset Management in Hong Kong.
"The overall market momentum is not likely to pick up anytime soon
and the economy in China is still very weak," Yiu said.
Fears of disinflation stemming from the rout in oil prices has led
investors to pare bets that the U.S. Fed's long-awaited interest
rate hike will come as early as September.
There is durable goods and factory data out later but Friday's
employment data is shaping up to be key for markets. They are
expected to show the U.S. economy created 225,000 new jobs in July,
according to economists polled by Reuters. The unemployment rate is
expected to hold steady at 5.3 percent.
"If we get some certainty about the strength of the U.S. economy and
the likelihood of policy normalization by the Fed, and if a rate
hike seems justifiable, that is positive for sentiment... because a
lot of people have been bracing for this," said Stefan Worrall,
director of cash equities at Credit Suisse.
(Editing by Janet Lawrence)
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