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 With Asian trading subdued, the mood persisted in Europe as share
prices struggled to build on some early momentum provided by oil's
biggest rise in three weeks and takeover talk in the pharmaceuticals
sector. [.EU]
Wall Street was expected to claw back some of the 1 percent the S&P
500 lost on Tuesday.
Attention was firmly on the release later on Wednesday of the
minutes from last month's U.S. Federal Reserve monetary policy
meeting and any new clues on how many interest rate hikes might be
expected this year, following some mixed signals from some of the
Fed's officials.
Though the dollar nudged off its lows against the yen, it was still
limping after comments from Japanese Prime Minister Shinzo Abe that
countries should avoid trying to weaken currencies with "arbitrary
intervention".
The yen remained in bullish form, down less than 0.1 percent against
the dollar at 110.34 yen <JPY=> and within striking distance of
109.92, its lowest level since October 2014.
"I think the market is trying to find an equilibrium here," said
National Australia Bank FX strategist Gavin Friend.
"The dovishness of Janet Yellen (Federal Reserve chair) has pushed
rate hike pricing right out, so every time you get stronger data or
stronger comments from the Fed you have this push-me, pull-me
situation that buffets markets."
The dollar was making better headway against other currencies. It
pushed both the euro <EUR=> and the pound <GBP=> down 0.3 percent to
$1.1350 and 1.4092 respectively and was up 0.3 percent on a broader
basket of currencies. <.DXY>
German data showing a fall in German industrial output did not help
the euro either, though the fall in the figures was smaller than
economists had been expecting, a relief after February orders data
had disappointed the day before.
In bond markets, the bounce in oil and modest lift in risk appetite
halted the push of German Bund yields towards zero.
"Bund strength looks set to run into resistance with 10-year yields
approaching last year's memorable tipping point," Commerzbank rate
strategist Rainer Guntermann said.
CRUDE MOVES
The 10-year U.S. Treasuries yield was also edging higher ahead of
the Fed minutes, having hit a five-week low of 1.715 percent the
previous day.
But as for much of the last year, oil was the main driver of most of
the market moves.
Crude prices extended their rebound as major oil producers continued
to drip-feed hopes they could agree to freeze output later this
month even without Iran which is still trying to get back on its
feet after years of sanctions.
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Russian sources told Reuters it believed $45-$50 per barrel was an
acceptable price for the oil market to re-balance and said there
were now discussions on how long to freeze production and how to
monitor it.
"A freeze without Iran is being discussed. At the moment we don't
see tough conditions (from others) for Iran to join," one of the
sources added.
The market was also helped by data on U.S. crude supply-demand for
last week from industry group American Petroleum Institute (API)
showing a surprise fall of 4.3 million barrels in inventories in the
week to April 1, versus an expected weekly increase of 3.2 million
barrels.
Brent crude futures jumped 2.5 percent to $38.80 per barrel, off a
one-month low of $37.27 hit on Tuesday, while U.S. crude futures
rose 3.2 percent to $37.05 a barrel, the biggest rise since March
22.
Overnight in Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan had ended the day barely in positive territory after
falling to its lowest level since March. 16.
South Africa hogged the rest of the emerging market spotlight. The
rand fell around 1 percent against the dollar to one-week lows,
extending losses of over 2 percent racked up on Tuesday when
President Jacob Zuma defeated an impeachment vote.
The renewed selling was triggered by comments from Standard & Poor's
that weak economic growth remained a pressure point on the
sovereign's rating, as it revised downwards its forecast for 2016
growth in South Africa.
"The market doesn't have many chances to be surprised on the
positive side," said Cristian Maggio, head of EM strategy at TD
Securities, adding he still thought the rand was overvalued.
(Additional reporting by Marius Zaharia and Claire Milhench; Editing
by Greg Mahlich and Richard Balmforth)
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