EUROPEAN stocks and oil prices snapped a four-day losing streak on Thursday and a rally in bond markets fizzled out as investors began to position themselves for United States jobs data.
The pan-European FTSEurofirst 300 index .FTEU3, which had fallen 1.2 percent to its lowest level in nearly a month in the previous session, rebounded 0.3 percent as firmer oil prices helped lift the region’s big producers.
Asian shares failed to avoid a seventh day of falls but there was a feeling of relief that at least the yen JPY= looked to have settled following a searing run this month that has sent it to an 18-month high.
Prime Minister Shinzo Abe said on Wednesday that Japan would act if necessary to weaken the yen, while the dollar has been supported by data which has fanned optimism that the U.S. economy could bounce back after nearly stalling this year.
The dollar was holding at 107.10 yen JPY= in European trading, above the recent 18-month trough of 105.55 but a long way from last week’s peak of 111.88.
The euro changed hands at $1.1454 EUR=, having been as high as $1.1614 this week from a low of $1.1213 in April. Against a basket of currencies the dollar was up 0.3 percent at 93.456 .DXY.
In commodity markets, industrial metals including copper and iron ore nursed more losses. Oil bounced as a huge wildfire in Canada disrupted oil sands production and escalating fighting in Libya threatened the North African nation’s output.
Brent crude LCOc1 was quoted 71 cents higher at $45.33 a barrel, while U.S. crude CLc1 added 89 cents to $44.67.
Bond markets had noticeably cooler feel, having seen one of their sharpest rallies of the year so far over the last week.
Yields on 10-year German Bunds and U.S. Treasury notes edged up to 1.179 and 0.208 percent receptively having both just hit their lowest in two weeks US10YT=RRDE10YT=RR.
The gap between Italian and German government borrowing costs hit its widest level in nine weeks however, after Rome announced an unscheduled bond exchange and investors readied for a series of political events in Europe.
Stalled talks between Greece and its international creditors over financial aid, as well as Spanish elections and Britain’s referendum on EU membership next month have led investors to reduce their exposure to riskier assets.
“There is a bit of (debt) supply to be absorbed this week and market sentiment is poor…so we are cautious on the direction for the periphery and expect more volatility,” Mizuho strategist Antoine Bouvet said.
