GLOBAL MARKETS-Share, bonds rebound after soothing c.bank talk, gold slumps

Wed Jun 26, 2013 9:13am EDT

* Gold hits near 3-year low on U.S. stimulus pullback
    * European shares, bonds rebound for second day
    * U.S. data supports recovery view, Fed tapering plan
    * Euro hits three-week low on dovish Draghi

    By Marc Jones
    LONDON, June 26 (Reuters) - World stocks and bonds had a
second day of strong gains on Wednesday, as healthy U.S. data,
moves by China to calm bank fears and supportive signs from
Europe's central banks extended the rebound from last week's
global sell-off.
    All combined to soothe nerves about plans for a reduction in
U.S. stimulus and recent China credit crunch worries, and left
futures pointing to opening gains of 0.5 percent on Wall Street
after a day of sustained buying in European and Asian markets. 
    Gold and silver, however, both slumped to near three-year
lows as investors continued to dump assets which they have used
as a safety net in recent years in case central bank money
printing fuelled inflation or backfired altogether.
    There was a slight drop back in equity markets after U.S.
growth was revised lower. Nevertheless, European shares were
still up 1.4 percent ahead of the U.S. restart and on course for
their biggest two-day gain since April.
    Bond markets in Europe and benchmark U.S. Treasuries
 also continued to claw back ground although
investors remained wary the rebound could give way with markets
likely to need more time to acclimatise to new environment.
    "At this point in time, having seen a incredibly violent
sell-off in the Treasury markets that took everything with it,
there is a certain amount of settling back going on," said Kit
Juckes, a market strategist at Societe Generale in London.
    "I'm not sure we are done with position adjustment yet
though. We are not even done with month-end (adjustments)
properly, so I wouldn't declare this as anything more than
things are looking a little bit quieter."
    
    ANTI-GOLD RUSH
    Precious metals were not looking quieter, however. Gold fell
over 2 percent to $1,230 an ounce and silver dropped 4 percent
to leave both at their lowest levels since September 2010 and
gold facing its biggest quarterly drop on record. 
    After almost nine years of near unbroken gains, signs that
the worst of the global financial turmoil may be over and that
central banks might begin reducing stimulus, has sparked a major
shift in investor attitude towards bullion.
    Data on Tuesday showed U.S. consumer confidence jumped in
June to its highest level in more than five years, supporting
the view that the Fed will press ahead with plans to reduce its
$85 billion a month support programme later this year.
    "It seems as though the momentum is increasing in the
sell-off (in gold)," said Viktor Nossek, head of research at
Boost ETP, an exchange traded products provider.
    "The case for safe havens assets simply isn't there" he
added. "The stock market has recovered, indicating people see
further stability ahead especially after the signals from the
Chinese authorities that they won't allow a complete meltdown in
the money markets."
 
     
    
    COOING DOVES
    The Fed's shift last week has triggered heavy volatility
across asset classes, raising concerns that it could snuff out
still-delicate economic recoveries in many parts of the world.  
 
    As new data showed Europe's economy remains in the doldrums,
the region's policymakers were again out in force.
    ECB head Mario Draghi reiterated that it remained ready to
cut rates again if needed, adding that he and his colleagues
would look "with great attention to the potential volatility
consequences." 
    Bank for International Settlements General Manager Jaime
Caruana also backtracked on a report published at the weekend,
telling Reuters the BIS was not in fact calling for immediate
moves to withdraw global stimulus. 
    Draghi's "dovish" comments helped pushed the euro to
a three-week low of $1.3035 against a broadly stronger dollar
 and helped trim yields on the bonds of peripheral euro
zone economies which have jumped by more than half a percent
over recent weeks.
    Elsewhere in the currency market, there was little reaction
by the Australia dollar after the country's government
ousted its leader ahead of upcoming elections 
    As the plunges in gold and silver grabbed most of the
attention in the commodities market, oil also remained under
pressure at just over $101 a barrel and growth-attuned copper
fell 1.6 near a three-year low.
    "The market is still concerned about the Chinese growth
outlook," said economist Alexandra Knight at National Australia
Bank in Melbourne in reference to the slide in copper.
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