GLOBAL MARKETS-World stocks win a respite, oil prices jump over 3%

GLOBAL MARKETS-World stocks win a respite, oil prices jump over 3%

Reuters  | May 15, 2020 16:40

GLOBAL MARKETS-World stocks win a respite, oil prices jump over 3%

* World share up, but set for weekly drop
* Oil prices rally more than 3%
* German Q1 GDP falls 2.2% Q/Q
* Graphic: World FX rates in 2020

By Dhara Ranasinghe
LONDON, May 15 (Reuters) - World stocks rose on Friday and
oil prices jumped more than 3%, taking the sting out of a week
that has seen sentiment hit as deteriorating U.S.-China
relations added to worries over how fast economies could recover
from the coronavirus shock.
Oil prices rose to their highest levels in more than a month
LCOc1 CLc1 on signs that demand from China is picking up.
European shares opened broadly higher, with stock markets in
London .FTSE , Paris .FCHI and Frankfurt .GDAX tracking
overnight gains in U.S. and Asian markets .N225
U.S. stock market futures ESc1 1YMc1 pointed to a
positive open for Wall Street shares.
Data showing China's industrial output in April rose 3.9%
from a year earlier, expanding for the first time this year,
bought some comfort to markets. Still, after a bruising week, a broad measure of European
stocks .STOXX was set to end the week 3% lower - the biggest
weekly fall since the mid-March rout in global stocks.
MSCI's world stock index .MIWD00000PUS , a touch firmer on
Friday, is down around 2.5% this week.
"After a brutal few days for stock markets, a late
turnaround in banking and energy stocks saw U.S. markets recover
from their lowest levels this month, to closer higher for the
first time this week last night," said Michael Hewson, chief
market analyst at CMC Markets.
"With Asia markets also having a positive
here in Europe have opened higher as we come to the end of what
is still likely to be the worst week for European stocks since
early March."
Analysts said this week's drop, while a natural correction
after a rally since mid-March, also reflected growing concerns
about rising U.S.-China tensions.
U.S. President Donald Trump on Thursday signaled a further
deterioration of his relationship with China over the novel
coronavirus, saying he has no interest in speaking to President
Xi Jinping right now and suggesting he could even cut ties with
Beijing. "There is no doubt that the optics around the
trade/diplomacy backdrop have worsened in the last week and this
has had a negative influence," said Chris Bailey, European
strategist at Raymond James in London.
"There has also been a subtle change in the perceptions of
market participants, for example the negative interest rate
debate getting a very good airing in the United States."
U.S. Federal Reserve Chair Jerome Powell has brushed off the
notion that the Fed could push rates below 0% after futures tied
to Fed interest rate policy expectations recently began pricing
a small chance of sub-zero U.S. rates within the next year.
Two year U.S. Treasury yields are trading at just 0.15%
US2YT=RR , while short-dated bond yields in Britain have dipped
back below 0% this week GB2YT=RR .
Faced with an exceptional hit from the coronavirus crisis,
central bankers are under intense pressure to do more to shore
up battered economies.
The German economy contracted by 2.2% in the first quarter,
its steepest three-month slump since the 2009 financial crisis
as shops and factories were shut in March to contain the spread
of the coronavirus, preliminary data showed on
Friday. Elsewhere, the dollar was a touch softer against major
currencies. The euro was around 0.1% firmer at $1.0815
EUR=EBS , while the dollar dipped 0.15% to 107.08 yen
Britain's pound was about a fifth of a percent weaker
against the euro EURGBP=D3 and the dollar GBP=D3 , with focus
on talks between Britain and European Union leaders on their
future relationship.

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