European stocks trade higher, focus on earnings
Oil prices fall, easing inflation worries
U.S., Japan, Korea make currency statement
(Updates prices throughout, adds Wall Street futures)
Global markets showed signs of recovery on Thursday, with European stocks rising slightly and the U.S. dollar pulling back from recent gains, while finance chiefs of the U.S., Japan and Korea issued a rare warning about currency weakness.
Stock markets sold off earlier this week, and Treasury yields and the U.S. dollar surged to multi-month highs, after investors were spooked by tensions in the Middle East after Iran's missile and drone attack on Israel on April 13. Mixed quarterly company earnings so far and recent comments from the U.S. Federal Reserve, which dampened rate cut expectations, also made investors more risk-averse.
The risk-off pullback showed signs of easing on Thursday. Asian stocks made their biggest gains in a month and European stocks opened higher, helped by more positive company earnings.
At 1208 GMT, the MSCI World Equity Index was up 0.2% on the day .MIWD00000PUS , but still down 2% so far this week.
The pan-European STOXX 600 was flat on the day, having lost its gains from earlier in the session .STOXX , while London's FTSE 100 was up 0.2% .FTSE .
Wall Street futures were a touch higher, as chip stocks rebounded. Nasdaq e-minis were up 0.2% NQcv1 and S&P 500 e-minis were up 0.2% EScv1 .
Fiona Cincotta, senior markets analyst at City Index, said that markets were being supported by a shift in focus away from the Fed and towards upcoming earnings, including Netflix NFLX.O later on Thursday.
Comments from European Central Bank vice president Luis de Guindos and an easing of oil prices have also helped support sentiment in Europe, she added.
"There’s still a little bit of optimism of lower rates, in the euro zone, that’s helping support European stocks," Cincotta said.
Oil prices eased, with Brent futures LCOc1 down 0.7% at $86.66 a barrel and U.S. West Texas Intermediate (WTI) crude futures CLc1 down 0.6% at $82.17 a barrel.
The two benchmarks slid 3% on Wednesday, in a move attributed to signs that fuel demand is lower than expected this year, amid flagging economic growth in China.
Lower oil prices can be seen as positive for stock markets as they help contain inflation, improving the chances for central bank interest rate cuts.
Analysts do not expect dramatic new sanctions on Iranian oil, which accounts for about 3% of global output.
The U.S. dollar index was down by less than 0.1% at 105.9 =USD and the euro was flat at $1.067275 EUR=EBS . The dollar had surged in recent weeks, and is up 1.4% so far this month, in its fourth consecutive month of gains. The index hit as high as 106.51 on Tuesday.
The United States, Japan and South Korea agreed to "consult closely" on foreign exchange markets in their first trilateral finance dialogue on Wednesday, acknowledging concerns from Tokyo and Seoul over their currencies' recent sharp declines.
Analysts said the rare warning from the three countries' finance chiefs may lay the groundwork for Japan to intervene in the yen.
The dollar-yen pair was at 154.45, within sight of Tuesday's 154.79, which was the yen's weakest in 34 years JPY=EBS .
U.S. Treasury yields were edging back up, with the 10-year yield at 4.6059% US10YT=RR and the 2-year yield at 4.9583% US2YT=RR .
In euro zone government bonds, the benchmark German 10-year yield was flat at 2.471% DE10YT=RR .
Gold XAU= was a touch higher at 2,381.49.
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