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 The yen and the euro rose against the dollar in a sign of investor
wariness after last week's sell-off of risky assets.
However U.S. stock index futures <ESc1> <1YMc1> suggested Wall
Street, which was closed on Monday for a holiday, would open higher.
Brent crude hit a 12-day high of $35.55 a barrel after Russia, Saudi
Arabia, Qatar and Venezuela agreed to freeze output to tackle a
global oil glut if other major exporters joined them. It last traded
at $33.82, up 44 cents on the day, as expectations for an immediate
deal faded.
"Even if they do freeze production at January levels, you've still
got global inventory builds which are going to weigh on prices. So
whilst it's a positive step, I don't think it will have a huge
impact on supply/demand balances," said Energy Aspects analyst
Dominic Haywood.
The pan-European FTSEurofirst 300 stocks index , which rose 6
percent in the last two trading days, traded in and out of positive
territory and was last up 0.1 percent. The STOXX Europe 600 oil and
gas index was up 0.8 percent, off earlier highs.
The banking index lost 1.2 percent. Standard Chartered fell 6.7
percent and Deutsche Bank, at the centre of investor concerns last
week over the potential impact on banks of slowing economic growth
and the impact of negative interest rates, fell 3.3 percent.
Earlier, Chinese stocks closed with their biggest daily percentage
gain in more than three months. Remarks by Premier Li Keqiang were
interpreted as hinting at more stimulus for the world's
second-biggest economy, and China reported bank lending rose to a
record high in January.
The impact of an economic slowdown in China has been at the heart of
investor concerns that have seen world stocks <.MIWD00000PUS> drop
nearly 10 percent this year.
The mood has brightened somewhat this week, although some analysts
have struggled to pin down exactly why. They say such threats as
slowing global growth and the spread of negative interest rates have
not gone away.
"You've got a market that's torn between two forces at the moment:
they want risk appetite to improve, they want these markets to go up
but it's clear that there's not a uniformity of view across the
market," said BNY Mellon currency strategist Neil Mellor.
MSCI's broadest index of Asia-Pacific shares outside Japan
gained 0.9 percent. Mainland China shares hit three-week highs, with
the Shanghai Composite index posting its biggest daily percentage
gain since Nov. 4.
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Premier Li Keqiang said on Monday the economy faced
great challenges but that China had plenty of room to manoeuvre
given its high savings rate.
Data showing Chinese banks extended a record 2.51 trillion ($385.40
billion) in new loans last month also helped stocks.
In Japan, Tokyo's Nikkei index followed its 7.2 percent gain on
Monday with a more modest 0.2 percent rise, led by a 16 percent
surge in telecoms group SoftBank, which said it would buy back up to
14.2 percent of its own shares.
YEN IN FOCUS
In foreign exchange markets, the dollar weakened 0.5 percent against
the yen to around 114 yen. It remained well off a 15-month low of
111.99 yen hit last week, when investors piled into the yen as a
safe haven and expectations faded that the Federal Reserve would
raise interest rates this year.
The euro was flat at $1.1158, down from last week's four-month high
of $1.1377.
The appeal of low-risk government debt, also sought as a shelter in
troubled times, dimmed. German 10-year bond yields rose 3.2 basis
points to 0.27 percent, having fallen as far as 0.13 percent last
week.
U.S. equivalents yielded 1.78 percent, compared with 1.75
percent at the close of Friday's U.S. trading session.
Gold, which had its best week in four years last week, earlier
dropped to $1,199 an ounce <XAU=> but last traded at $1,1213.
(Additional reporting by Hideyuki Sano in Tokyo, Amanda Cooper,
Marius Zaharia, Jemima Kelly and Jamie McGeever in London, editing
by Larry King and Susan Thomas)
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