GLOBAL MARKETS-Shares, oil rebound but growth concerns linger

Thu Apr 18, 2013 8:19am EDT

* European shares up 0.4 percent from 2013 low

* Oil recovers to $99 barrel after hitting 9-mth low

* Gold holds above 2-yr low as physical demand seen

* Spain sees successful debt sale on rate cut hopes

By Richard Hubbard

LONDON, April 18 (Reuters) - European shares and oil staged tentative recoveries on Thursday from a sharp selloff this week provoked by concerns about the global economic outlook, while gold bounced off a two-year low.

U.S. stock futures pointed to a slightly higher open on Wall Street as well, after both the Standard & Poor's 500 Index and the Nasdaq Composite Index closed down more than 1 percent on Wednesday.

Analysts said investors remain sensitive to signs of economic weakness despite the market's recovery but, having pushed stock and commodity prices down to multi-month lows, they were likely to await more evidence before deciding whether to sell further.

"I think it will relatively quiet today and tomorrow until we get the next round of big economic indicators," said Nick Beecroft, senior market analyst at Saxo Capital Markets.

Europe's broad FTSE Eurofirst 300 index, which in the four days to Wednesday's close lost 3.8 percent to hit its lowest point of the year, had gained 0.4 percent by midday.

Frankfurt's DAX and the Paris CAC-40 were up 0.5 and 0.9 percent respectively, though both indexes are in down for the year to date after this week's falls.

Earlier Japan's Nikkei average declined 0.9 percent and MSCI's index of Asia-Pacific shares outside Japan fell 0.7 percent, leaving the MSCI world equity index down 0.1 percent at 355.1 points.

Surprisingly weak Chinese and U.S. economic data, on top of the International Monetary Fund's decision to trim its global growth forecast this week, have driven the equity market falls, outweighing support from easier global central bank policies.

Some analysts say the market move is more a timely correction after strong gains in the first quarter of the year, when optimism about the U.S. economy lifted Wall Street stocks to record peaks and boosted European shares to multi-year highs.

COMMODITIES SINK

The prospect of lower global growth, and with it weaker demand for goods used in industrial production, has weighed heavily on commodity markets.

Copper, a gauge for manufacturing and China-related growth, broke below $7,000 a tonne on Thursday for the first time since late 2011, with London copper futures settling at around $6,985 a tonne.

Brent crude oil gained over a dollar a barrel to near $99 after earlier touching its lowest levels since last July, while U.S. crude gained $1 to $87.70, having dipped under $86 earlier to a fresh four-month low.

U.S. gold futures, which sometimes dictate spot gold prices, were up around 0.85 percent to $1,394.60 an ounce, having fallen as much as three percent earlier when holdings in the world's top gold-backed exchange-traded fund were revealed to have hit a three-year low.

Spot gold was at $1,334.50 an ounce, near Tuesday's two-year trough of $1,321.35 and down about a quarter from last year's peak after shedding 18 percent so far this year.

However, the lower gold price was seen drawing demand from investors who want to hold the physical product rather than securities representing the metal.

"Investors, who value physical gold over paper gold, have viewed these low prices as a buying opportunity," said Edmund Moy, chief strategist at gold provider Morgan Gold, adding that sales of new gold coins from the U.S. Mint had jumped in April.

SPAIN SELLS

In Europe's debt markets, investors shrugged off the growth worries and focused instead on the likelihood they would prompt an interest rate cut by the European Central Bank.

This allowed Spain to sell 4.7 billion euros ($6.1 billion) of new bonds at a lower borrowing cost than at recent auctions as investors snapped up the high yielding debt.

"Today's well received auction ...underscores the extent to which peripheral euro zone debt markets are almost immune from growing concerns about economic growth," said Nicholas Spiro, managing director of consultancy firm Spiro Sovereign Strategy Ltd.

German Bund futures were slightly softer after the debt sale at 146.05 but were being supported by the expectations of continuing loose central bank monetary policy.

Demand was boosted on Wednesday by comments from ECB policymaker Jens Weidmann, who stoked a belief that interest rates could fall if economic data remains weak.