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GLOBAL MARKETS-Draghi soothes stocks after mauling, oil steady

Published 22/01/2016, 01:44 am
© Reuters.  GLOBAL MARKETS-Draghi soothes stocks after mauling, oil steady
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* European shares jump, euro slides as ECB flags March easing

* Wall Street opens higher, despite rise in jobless claims

* Oil steadies to give commodities respite

* Rouble plunges over 3 percent to set new record low

* Dollar moves higher after touching 1-year low vs. safe-haven yen

By Marc Jones

LONDON, Jan 21 (Reuters) - A bounce in European shares, a tentative stabilisation in oil and soothing sounds from ECB head Mario Draghi helped steady global markets on Thursday, after a torrid few days that has wiped trillions of dollars off asset values.

A 3-percent slump in Chinese stocks had given Asia another bruising, so there was relief as a more than 1 percent jump for London's FTSE .FTSE , Germany's DAX .GDAXI and France's CAC 40 .FCHI as Draghi hinted at more rate cuts, pulled markets out of their nosedive. .EU

Draghi said the dramatic slump in oil and stocks prices this month had compounded the risks to the euro zone economy and that it would "review" its already record low interest rates and 1.5 trillion euro money printing programme at its March meeting.

"In this (volatile market) environment, euro area inflation dynamics also continue to be weaker than expected," Draghi said.

"It will therefore be necessary to review and possibly reconsider our monetary policy stance at our next meeting in early March when the new staff macroeconomic projections become available."

As nerves settled, U.S. futures prices flicked from red to green and Wall Street main S&P 500 ESc1 and Dow Jones Industrial 1YMc1 opened roughly 0.6 percent higher as traders brushed off a jump in unemployment benefit claims. .N was also relief that oil prices, which are 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 $27.70 for Brent LCOc1 and $28.20 for U.S. benchmark WTI CLc1 . O/R

Draghi's comments cut the euro to below $1.08 for the first time in two weeks and to a 9-month low against Japan's yen which has been boosted in recent weeks by its reputation as a safe refuge in times of market turmoil.

Euro zone bonds rose too. German Bund yields, which move inverse to prices, fell to their lowest since May last year as the recent strains on Portuguese, Italian and Spanish bonds also eased. GVD/EUR

"Draghi is painting the picture you would expect," said National Australia Bank strategist Gavin Friend said. "He is opening the door to further policy easing if the conditions require."

SUBMERGING MARKETS

In emerging markets the tensions remained intense, however. MSCI's 23-country EM index notched a 6-1/2 year low and Russia's rouble RUB= tanked almost 5 percent at one point as it set a record low against the dollar for a second day running. 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. 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 .CSI300 .SSEC , which in tandem with oil have been the major trigger behind the global rout, ended down 3 percent after another volatile session there. .SS

That in turn sent MSCI's broadest index of Asia-Pacific excluding Japan .MIAPJ0000PUS to a new 4-year low. Japan's Nikkei .N225 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 swoon in the euro sent the dollar index .DXY , which tracks the U.S. unit against six of the world's other biggest currencies, up 0.5 percent.

The dollar also clawed back to 117.16 yen JPY= after hitting 115.97 on Wednesday having been undermined by U.S. data China's volatile markets

http://link.reuters.com/myh35w Currencies vs dollar

http://link.reuters.com/tak27s ECB QE projections

http://link.reuters.com/dan83w Oil prices

http://link.reuters.com/beb23v

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