World stocks rebound as China soothes yuan weakness fears
HONG KONG — World stock markets rebounded Thursday as the fall in the Chinese yuan slowed and the country's central bank tried to dampen speculation of further devaluation.
KEEPING SCORE: In Europe, the FTSE 100 index of leading British shares was up 0.7 percent at 6,618 while Germany's DAX rose 1.9 percent to 11,136. The CAC-40 in France was 1.9 percent higher too, at 5,018. U.S. stocks were poised to open higher with Dow futures and the broader S&P 500 future set for gains of 0.3 percent at the bell.
YUAN SLIDE: The Chinese currency fell for a third day but by late afternoon its decline was only 0.2 percent compared with drops of up to 1.9 percent on the previous days. It has dropped a total of 2.9 percent since Tuesday. The surprise move earlier this week to loosen the mechanism that controls the yuan and send the currency lower reverberated through global markets but the turmoil is now abating. Sentiment was soothed further by comments from the central bank. The official reason for letting the tightly controlled yuan fall is to make it more responsive to market forces but a weaker yuan also gives a competitive boost to exports from China, where the economy is slowing.
ANALYST VIEW: "Clearly the central bank doesn't want the currency to depreciate too fast and it is more than willing, and able, to intervene in order to ensure this," said Craig Erlam, senior market analyst at OANDA.
ASIAN SCORECARD: Major Asian benchmarks finished higher after a two-day sell-off. Japan's Nikkei 225 rose 1 percent to 20,595.55 and South Korea's Kospi gained 0.4 percent to 1,983.46. Hong Kong's Hang Seng climbed 0.4 percent to 24,018.80 and the Shanghai Composite Index in mainland China added 1.8 percent to 3,954.56 after briefly slipping into negative territory. Australia's S&P/ASX 200 advanced 0.1 percent to 5,387.90.
CURRENCIES: The dollar rose to 124.44 yen from 124.26 yen in late trading Wednesday. The euro slipped to $1.1112 from $1.1156.
ENERGY: Benchmark U.S. crude rose 20 cents to $43.50 in electronic trading on the New York Mercantile Exchange. The contract rose 22 cents to close at $43.30 a barrel on Wednesday. Brent crude, an international benchmark, added 50 cents to $50.68 in London.
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