GLOBAL MARKETS-U.S. stocks rebound from rout, dollar edges up

Tue Feb 4, 2014 4:20pm EST

* Wall Street rebounds, MSCI world index stuck near 4-month
low
    * European shares cut losses; Nikkei posts worst day since
June
    * Dollar edges up as safe-haven bids fade for yen, bonds,
gold
    * Emerging market stocks trim decline, currencies stabilize


    By Richard Leong
    NEW YORK, Feb 4 (Reuters) - Wall Street stock prices rose on
Tuesday, helping world shares steady after they hit a near
four-month low, while the yen and U.S. and German government
debt prices fell as jitters over emerging markets retreated.
    Renewed bids for U.S. equities bolstered the dollar and oil
and pared the safe-haven demand for gold.
    Monday's sharp decline on weaker-than-expected U.S. data,
concerns over growth in China and the outlook for some emerging
economies opened the door for traders looking for bargains,
analysts said.
    "Yesterday was really the first concerted selloff,
indiscriminate as to individual stocks," said Rick Meckler,
president of investment firm LibertyView Capital Management in
Jersey City, New Jersey.
    "With that type of selling going on, this morning you're
seeing some bargain-hunters looking for oversold opportunities."
   
    After the previous session's pounding, the Dow Jones
industrial average ended up 72.44 points, or 0.47
percent, at 15,445.24. The Standard & Poor's 500 Index 
closed up 13.31 points, or 0.76 percent, at 1,755.20. The Nasdaq
Composite Index finished up 34.56 points, or 0.86
percent, at 4,031.52.
    The bounce in U.S. equities pulled MSCI's world index
 from its lowest level since October, set earlier
as Japan's Nikkei recorded a 4 percent drop. The measure
of shares in 45 countries was last down 0.18 percent at 384.97.
    Europe's top shares finished 0.17 percent lower at
1,270.74 after falling as much as 0.68 percent. 
    U.S. factory orders released shortly after the Wall Street
open bolstered the fragile mood. Nevertheless, lingering anxiety
about troubles in emerging markets and uneasiness over the
upcoming U.S. jobs report on Friday kept traders on edge.
 
    "This emerging (market) crisis does matter if it worsens
because it will have an impact on global growth," said Daniel
McCormack, a strategist at Macquarie in London.
    Emerging market stocks came back from a 1.4
percent drop to end 0.8 percent lower, while hard-hit currencies
including Turkey's lira, Russia's rouble,
Hungary's forint and the South African rand all
moved away from their recent lows. 
    As the severity in the selloff in emerging markets abated,
the dollar improved slightly against major currencies, bouncing
back from a more than two-month low of 100.74 yen earlier.
    The dollar index was up 0.14 percent at 81.12,
retracing part of the 0.37 percent drop on Monday. The greenback
rose 0.64 percent versus the yen at 101.61 yen.
    Reduced safe-haven bids bogged down U.S. Treasuries and
German Bunds. Benchmark 10-year U.S. government debt 
fell 12/32 in price to yield 2.626 percent after its yield
slipped to a three-month low late on Monday. German Bund futures
 lost 12 basis points to 143.90.  
    Gold gave back some of Monday's safe-haven gains and
last traded down 0.2 percent at $1,254.91 an ounce.
    In other commodities, oil prices in London fell on worries
about weakening demand in the wake of recent disappointing U.S.
and Chinese economic data. Brent crude settled 26 cents,
or 0.25 percent, lower at $105.78 a barrel.
    U.S. oil futures, on the other hand, rose on bets on
a reduced stockpile at a key delivery point due to the start-up
of a major pipeline. The March NYMEX contract settled up
76 cents or 0.79 percent at $97.19 a barrel. 
      
    
    TEN-PERCENT CORRECTION?
    The stock market gyrations caused the VIX, seen as
the market's fear index, to jump to its highest since June on
Monday before easing 11.9 percent to 18.90 on Tuesday.
    "Sentiment has soured so it's reasonable to see some more
downward move in the near term," said Terry Sandven, chief
equity strategist with U.S. Bank Wealth Management in
Minneapolis.
    The Nikkei has shed 14 percent since the start of the year
following last year's 50 percent boom. By comparison, the U.S.
benchmark S&P 500 has dropped 5.0 percent and the
FTSEurofirst 300 has fallen 3.5 percent.
    "With the main European indexes down around 7 percent (since
peaks), chatter on trading desk is about whether we are in for a
'10 percent' correction," Jonathan Sudaria, a dealer at Capital
Spreads in London, said in emailed comments.
    More evidence of a slowing global economy will likely have
to materialize for stocks to fall much further, U.S. Bank's
Sandven said. "We are not in a bear market yet. We are in still
an uptrend."
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