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GLOBAL MARKETS-Shares rebound as lira pulls out of nosedive

Published 15/08/2018, 01:25 am
© Reuters.  GLOBAL MARKETS-Shares rebound as lira pulls out of nosedive
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(Adds U.S. market open, byline, dateline; previous LONDON)

* Wall Street stocks rise, following climb in Europe

* Lira rebounds 5 pct after three week-long thrashing

* Rand, ruble, real and Mexican peso all recover

* China data mostly softer, but German data bounces

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

By Herbert Lash

NEW YORK, Aug 14 (Reuters) - World share markets rebounded on Tuesday as Turkey's lira pulled out of a recent nosedive and reassuring data from Germany helped offset the latest wobbles in China's giant economy.

After three weeks of heavy pounding, the lira got some respite as signs Turkish authorities were trying to address the unresolved damage triggered an almost 5 percent relief rally to about 6.5 per dollar. TRY=

Still, the currency lost almost 10 percent on Monday and nerves were briefly tested again as President Tayyip Erdogan urged Turks to boycott U.S. electronic products in response to recent criticism from Washington. don't believe it's all over," said Minh Trang, senior currency trader at Silicon Valley Bank in Santa Clara, California. "We are just getting a bit of reprieve from the recent down move."

The Turks have exhausted the possibility of interest rate hikes and are backed into a corner by their inadequate level of currency reserves, Paul McNamara, emerging markets investment director at GAM Investment Management in London, said in a note.

A much-needed demand slowdown in Turkey is causing asset quality problems in banks, he said. The role of construction in the Turkish economy, for example, is comparable to that in Spain or Ireland ahead of the European bust a decade ago, he said.

MSCI's gauge of global equity markets .MIWD00000PUS halted a four-day slide to rise 0.28 percent, while Japan's Nikkei .N225 jumped 2.28 percent in its biggest one-day gain since March. shares steadied after a two-day selloff as concerns about contagion from Turkey's currency crisis eased. The pan-regional FTSEurofirst 300 index .FTEU3 edged up 0.01 percent and the benchmark STOXX 600 .STOXX slid 0.03 percent.

Data showing the region's largest economy, Germany, picking up more steam than expected in the second quarter helped sentiment in Europe, though the markets' bounce might have been bigger had Chinese economic surveys not disappointed. growth slowed to a record low while industrial output and retail sales both missed expectations. downdraft for emerging market currencies stopped, with the South African rand ZAR= , Russian ruble RUB= , Brazilian real BRL= and Mexican peso MXN= , a proxy for emerging market currencies, all rising.

Still, MSCI's emerging markets index for equities .MSCIEF fell to its lowest since July 2017.

Stocks on Wall Street rallied. The Dow Jones Industrial Average .DJI rose 121.53 points, or 0.48 percent, to 25,309.23. The S&P 500 .SPX gained 17.09 points, or 0.61 percent, to 2,839.02 and the Nasdaq Composite .IXIC added 39.60 points, or 0.51 percent, to 7,859.31.

The euro fell, hitting 13-month lows against the dollar and Swiss franc, as traders fretted over the exposure of European banks to Turkey.

The dollar index .DXY , tracking it against a basket of major currencies, rose 0.02 percent, with the euro EUR= down 0.26 percent to $1.1378. The Japanese yen JPY= weakened 0.15 percent versus the greenback at 110.93 per dollar.

Oil prices jumped after Saudi Arabia said it cut production, adding to concerns about global supply as U.S. sanctions against Iran bite its exports.

U.S. crude CLcv1 rose 80 cents to $68.00 a barrel and Brent LCOcv1 gained 81 cents to $73.42.

For graphics on the wider market impact of the Turkish lira crash, click Turkey's ripple effect on global assets

https://reut.rs/2vHB5ry

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