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 After a strong start to the week for risk assets like stocks and
oil the mood was a little more cautious, with so-called safe haven
assets like the Japanese yen, government bonds and gold all moving
higher.
Investors will watch oil as a barometer of broader market sentiment
on Wednesday, in particular how a proposal from top exporters Russia
and Saudi Arabia on Tuesday to freeze output is greeted by Iran,
which was absent from the talks and is determined to raise
production.
"While the commitment to freeze production at current levels
underwhelmed, in the absence of any prospect of an agreement from
Iran anything else was always going to be treated with a healthy
dose of scepticism," said Michael Hewson, chief market analyst at
CMC Markets.
After falling at first, oil recovered, and in early European trade
on Wednesday Brent <LCOc1> was up 0.4 percent at $32.33. U.S. crude
<CLc1> was up 0.2 percent to $29.11 a barrel.
 European shares brushed off the decline in Asia to extend this
week's rally. Investors cheered the latest earnings reports, chief
among them French bank Credit Agricole's promise of stable investor
returns and a solid capital base.
The pan-European FTSEurofirst 300 index of leading shares was up 0.5
percent, bringing its gains for this week to 3 percent and putting
it on track for its best week in three months. Britain's FTSE
<.FTSE> was up 0.7 percent and Germany's DAX <.GDAXI> and France's
CAC 40 <.FCHI> both rose 0.6 percent.
Earlier, MSCI's broadest index of Asia-Pacific shares outside Japan
lost 0.6 percent, reversing early gains of 0.4 percent, after a 3
percent rise over the previous two sessions.
The Shanghai Composite Index <.SSEC> slid 0.3 percent and Japan's
Nikkei <.N225> fell 1.7 percent but is still up more than 5 percent
on the week.
MSCI's index of world shares <.MIWD00000PUS> was flat after rising
2.3 percent on Tuesday, its second-best gain in four years.
E-Mini futures for the S&P 500 <ESc1> slipped 0.1 percent. The S&P
500 <.SPX> added 1.65 percent on Tuesday, the Dow <.DJI> ended up
1.39 percent and the Nasdaq <.IXIC> up 2.27 percent. [.N] MOOD
SWINGS
Markets now await minutes of the Federal Reserve's last meeting to
judge views of policymakers on the prospect of further rate hikes.
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Boston Fed President Eric Rosengren sounded in no hurry to tighten.
Speaking on Tuesday, Rosengren said the Fed would need to lower
economic forecasts it made in December because of the uncertain
global outlook.
Doubts about the pace of any further rate increases held back the
U.S. dollar at 96.720 <.DXY> against a basket of currencies. It
slipped against the yen to 113.68 yen <JPY=>, though it has support
around 113.60. The euro gained 0.2 percent to $1.1165 <EUR=>.
The big loser was sterling, which has struggled so far in 2016
because of worries Britain might leave the European Union. On
Thursday, Prime Minister David Cameron will try to persuade other
leaders to support an agreement to keep Britain in the EU.
"We do not expect any further negative reaction to be hefty or
long-lasting as investors are unlikely to remain too much positioned
ahead of the start of the key EU summit tomorrow," wrote Unicredit
currency strategists in a note on Wednesday.
"While we see sterling remaining sluggish as long as the 'Brexit'
scenario weighs on markets, we are more bullish over the medium
term," they said, pointing to the tight UK labor market.
Sterling <GBP=> was last down on the day at $1.4265, having shed 1
percent against the dollar on Tuesday.
In bond markets the benchmark 10-year U.S. Treasury yield was down
almost three basis points at 1.75 percent <US10YT=RR> and the
10-year Bund yield was down nearly two basis points at 0.25 percent
<EU10YT=RR>.
Gold snapped a three-day losing streak to trade up 0.4 percent at
$1,205 an ounce <XAU=>.
(Editing by Larry King)
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