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

Tue Feb 4, 2014 1:25pm EST

* Wall Street rebounds, MSCI world index stuck near 4-month
low
    * European shares pare losses; Nikkei has worst day since
June
    * Dollar gains as safe-haven bids for yen, bonds fade


    By Marc Jones and Richard Leong
    LONDON/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 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 was up 86.28 points, or 0.56 percent,
at 15,459.08. The Standard & Poor's 500 Index was up
13.87 points, or 0.80 percent, at 1,755.76. The Nasdaq Composite
Index was up 40.08 points, or 1.00 percent, at 4,037.04.
    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 0.15 percent at 385.09.
    Europe's top shares provisionally closed down 0.17
percent 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, there remained
plenty to keep 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 also pared losses but were
still down sharply for a second day, 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.
    Given a pause in the selloff in emerging markets, 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 0.15 percent at 81.13,
retracing part of the 0.37 percent drop on Monday. The greenback
rose 0.65 percent versus the yen at 101.64 yen.
    Reduced safe-haven bids bogged down U.S. Treasuries and
German Bunds. Benchmark 10-year U.S. government debt 
fell 11/32 in price to yield 2.6221 percent after hitting a
three-month low late Monday. German Bund futures fell
12 basis points to 143.90.  
    Gold gave back some of Monday's safe-haven gains and
last traded down 0.4 percent at $1,251.51 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 last traded 23
cents lower at $105.81 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 February NYMEX contract rose 78
cents to $97.21 a barrel. 
      
    
    TEN-PERCENT CORRECTION?
    The stock market gyrations caused the VIX, the
market's fear seismograph, to jump to its highest since June.
    The Nikkei's 4 percent dive meant it has now shed 14 percent
of last year's 50 percent boom. By comparison, the U.S.
benchmark S&P 500 is down 5.8 percent and the
FTSEurofirst 300 has dropped 3.3 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.
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