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 Markets rose briefly on Friday, with European stocks and the euro
both supported in early deals after Greek parliament approved a
third multi-billion euro bailout deal.
However, investors were underwhelmed by weaker-than-expected euro
zone economic growth figures, and market sentiment remained fragile.
Oil slumped to its lowest since March 2009 and emerging market
currencies - notably the Turkish lira and South African rand - slid
to historical lows.
The FTSEurofirst 300 index of leading European shares gave away
early gains to trade down 0.2 percent 1040 GMT. The Euro STOXX 50
traded down 0.7 percent, weighed down by a 1 percent fall in oil and
gas shares.
Before Wall Street's open, U.S. stock futures were down 0.2 percent.
European stocks were poised for a weekly loss of 3 percent, their
biggest loss in six weeks. A close of 3.5 percent on the week would
be the biggest decline this year.
European equities have been under pressure from a falling yuan,
which has hit auto stocks, miners and luxury firms. However, some
said the drop had gone too far.
"We think it plausible that European equity markets have reacted too
negatively to the 4 percent depreciation of the yuan," strategists
at Morgan Stanley said in a note.
"Any indications that China may introduce a wider stimulus program
could shift sentiment from risk-off to risk-on as
investors consider the potential for better global growth."
Earlier on Friday, the Greek parliament voted to approve the
country's third financial rescue by foreign creditors in five years.
Prime Minister Alexis Tsipras still faces a confidence vote later
this month.
Meanwhile, official figures showed that the German and Italian
economies expanded more slowly than expected in the second quarter.
The French economy didn't grow at all.
OIL NOT SO SLICK
In commodities trading, crude oil futures extended sharp losses that
pushed oil prices to levels not seen since early 2009, when the
financial crisis was wreaking havoc on markets.
U.S. crude fell to a new 6 1/2-year low of $41.35 a barrel, as a big
increase in U.S. stockpiles intensified worries over a growing
global glut. It was last down 0.1 percent at $42.14 a barrel. Brent
was flat at $49.21.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan
slipped 0.1 percent, ending the week down 2.7 percent, its biggest
weekly loss since early July.
Japan's Nikkei stock index fell 0.4 percent, and was down about 1
percent for the week.
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The People's Bank of China set its midpoint yuan rate at 6.3975 per
dollar before the market opened, firmer than the previous day's
close of 6.3990. The yuan also strengthened in spot market trading,
changing hands at 6.3918 late in the Asian session.
But over the week, the yuan lost nearly 3 percent after the central
bank's devaluation on Tuesday and pledge to allow market forces to
play a greater role in setting the exchange rate.
"We just need to see if the yuan is going to stay halfway stable
over the next few days, then confidence is going to come back," said
Markus Huber, senior equity sales trader at Peregrine & Black. "If
China calms down, we're going to have the potential for a rate hike
in the U.S. on the table again, and that could be the next drag on
markets."
The dollar was largely steady against its main rivals on Friday. It
fell 0.2 percent against the yen at 124.15 yen, off its two-month
high of 125.28 on Tuesday. The euro rose 0.2 percent to $1.1167 and
is up 1.8 percent this week.
The greenback came under pressure this week as China's devaluation
curbed expectations the Federal Reserve's long-awaited interest rate
increase would come as early as its Sept. 16-17 meeting. But strong
U.S. retail sales data on Thursday backed the view that the Fed was
ready to hike.
The yield on 10-year U.S. Treasury notes was roughly steady on the
day - and the week - at 2.17 percent, having fallen to a near
four-month low of 2.04 percent on Wednesday.
Gold was flat on the day but up 2 percent on the week, its best
weekly performance in three months.
(Reporting by Jamie McGeever, Alistair Smout in London, editing by
Larry King; To read Reuters Global Investing Blog click on http://blogs.reuters.com/globalinvesting;
for the MacroScope Blog click on http://blogs.reuters.com/macroscope;
for Hedge Fund Blog Hub click on http://blogs.reuters.com/hedgehub)
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