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 U.S. stock market futures pointed to a firm start for Wall Street, a
day after weak Chinese trade data and a tumble in oil prices
rekindled growth fears and knocked the S&P 500 stock index
down more than 1 percent.
Against this backdrop, yields on safe-haven government bonds in the
United States and Europe rose, while the euro weakened ahead of
Thursday's keenly-anticipated European Central Bank meeting.
Oil prices rallied on speculation that the world's largest exporters
could agree this month to freeze production and help erode the
largest global build in unwanted crude in years.
Brent crude futures rose 68 cents to $40.33 a barrel by 1050
GMT, having touched three-month highs on Tuesday above $41, while
U.S. crude futures were up 54 cents at $37.03.
London copper prices also steadied a day after suffering their
biggest one-day drop since November on weak Chinese data.
The rebound in commodity and oil prices, which fell about 3 percent
on Tuesday, supported sentiment in stock markets.
Blue-chip stock markets in London, Paris and Frankfurt were
all firmly in positive territory, while the broader European share
market rose 0.8 percent.
"Volatility in stock markets is very high and you can see that today
with a recovery in European share markets, which we can put down to
the stabilization in oil prices," said Ipek Ozkardeskaya, a market
analyst at London Capital Group.
In Asia, Chinese shares closed more than 1 percent lower,
while MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.3 percent, down 1.4 percent from a two-month high hit on
Monday.
Japan's Nikkei ended the day down 0.8 percent, its lowest close in a
week.
Lingering anxiety about China following Tuesday's poor trade numbers
also weighed on emerging market stocks, which slipped for a second
straight day.
China's February trade performance was far worse than economists had
expected, with exports tumbling the most in over six years.
"Investors are once again focused towards the scanty economic data
over in China and the anxiety is if the People's Bank of China has
the right tools to help the recovery," said Naeem Aslam, chief
market analyst at AvaTrade.
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YEN RALLIES
A moderately risk-averse tone dominated currency markets, with the
safe-haven yen broadly higher amid anxiety about China.
The yen was 0.25 percent firmer at 112.37 per dollar and was
up 0.5 percent against the euro at 123.35.
The People's Bank of China set the yuan's midpoint rate at 6.5106
per dollar prior to market open, weaker than the previous fix. The
currency opened stronger at 6.5062 but has since weakened to 6.5124.
The euro meanwhile slipped 0.5 percent to around $1.0961 ahead of
the ECB's policy meeting on Thursday.
Financial markets expect the ECB to cut its deposit rate by at least
10 basis points and expand its asset-buying program.
With so much priced in, however, some traders are primed for a
repeat of the sharp gains in the euro seen in December when the
ECB's measures fell short of market expectations.
"The poor Chinese data is fuelling risk aversion, but that is slowly
giving way to some positioning adjustment before the ECB meeting,"
said Niels Christensen, FX strategist at Nordea.
"Given expectations are so high that the ECB will ease policy, there
is a chance that it could fall short and we could see a bounce in
the euro," he said.
Ahead of the ECB, the Bank of Canada will announce a policy decision
later on Wednesday. The central bank is expected to hold interest
rates at 0.50 percent.
(Additional reporting by Anirban Nag and Amanda Cooper; Editing by
Toby Chopra)
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