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 A 3-percent slump in Chinese stocks had given Asia another
bruising, so there was relief as 0.4-0.5 percent gains for London's
FTSE, Germany's DAX and France's CAC 40 pulled markets out of their
nosedive.
The pan-European FTSEurofirst 300 hit its lowest since October 2014
on Wednesday and the MSCI All-World country index is at its lowest
since mid 2013.
Oil prices, down more than 25 percent since the start of the year
and one of the main drivers of the cross-asset rout, were also
steadier at $27.60 for Brent and $27.95 for U.S. benchmark WTI.
The European Central Bank (ECB) meets on Thursday and is expected
keep already record-low interest rates on hold. Traders will be
watching closely to see what impact the latest market turmoil is
having on its decision makers.
"Europe is holding up a bit better which is welcome considering Asia
equities continued to trade lower," Societe Generale strategist,
Alvin Tan, said.
"For one thing, oil is not exactly rallying but at least it is
holding on, and we have the ECB meeting today which is a big event,
so I think people are just being a bit more restrained."
With nerves still fragile and risk appetite low, futures prices
pointed to Wall Street's main S&P 500 and Dow Jones Industrial
markets starting down 0.5 percent after they had closed at more than
one-year lows on Wednesday. [.N]
The strain was also showing on euro zone periphery bonds. Portuguese
10-year yields saw a 12 basis points (bps) improvement on the day,
but the gap with German equivalents was the widest since October
2014. [GVD/EUR]
In Italy, yields dipped to 1.57 percent, but their gap with Bunds
was the widest since August last year.
In emerging markets the tensions were even more intense. MSCI's
23-country EM index notched a 6-1/2 year low and Russia's rouble
tanked more than 4 percent as it set a record low against the dollar
for a second day running.
The Krelin called the rouble moves "volatile" but said it was "not
collapsing". A spokesman said President Vladimir Putin had no
special meetings on the situation planned, though he was being kept
regularly updated on the market moves.
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SUBMERGING MARKETS
Investors were getting ready for the ECB's 1245 GMT rate decision
and the 1330 GMT news conference with the bank's head, Mario Draghi,
where focus will be firmly on his view of this month's market slump.
Chinese stocks, which in tandem with oil have been the major trigger
behind the global rout, ended down 3 percent after another volatile
session there.
That in turn sent MSCI's broadest index of Asia-Pacific excluding
Japan to a new 4-year low. Japan's Nikkei ended down 2.4 percent
too, adding to its 3.7 percent plunge in the previous session.
Shanghai-based investor director at Nanhai Fund Management Co, David
Dai, said fears of a prolonged bear market were, nevertheless,
overdone.
"With stocks having fallen so much, much of the risk has been priced
in and another free-fall is quite unlikely, although the chance of a
sustainable rebound is slim," he said.
In the foreign exchange markets, the dollar index, which tracks the
U.S. unit against six of the world's other biggest currencies, was
down about 0.1 percent at 99.025.
The dollar fell roughly 0.1 percent to 116.75 yen after hitting
115.97 on Wednesday, undermined by U.S. data. Ahead of the ECB
meeting, the euro was buying just over $1.09. Before the last one in
December, it had been just above $1.05.
"Risk aversion related to global issues may result in periods of
support for the euro," Credit Suisse currency analysts wrote.
"Falling oil, however, raises risks that ECB may ease again," they
said.
(Additional reporting by Lisa Twaronite in Tokyo; Editing by Louise
Ireland)
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