GLOBAL MARKETS-Europe rebounds as Ukraine rebels hand over black boxes

Tue Jul 22, 2014 7:34am EDT

* European bourses rise as black boxes handed over
    * Russian stocks see first rise in almost two weeks
    * MSCI Asia hits 3-year peak, Nikkei up after Japan holiday
    * U.S. stock futures edge higher, underpinned by earnings
    * Dipping U.S. Treasury yields still holding back dollar

    By Marc Jones
    LONDON, July 22 (Reuters) - European markets rode a global
rebound in risk appetite on Tuesday, helped by the first signs
of cooperation from Ukraine's pro-Russian separatists over the
downed Malaysian Airlines plane.
    After days of uncertainty, a train carrying the remains of
some of the almost 300 victims arrived in Ukrainian government
territory and separatist leaders have handed Malaysian
authorities the aircraft's flight recorders. 
    That helped settle market nerves, lifting shares both in
Europe and Asia and pushing back many of the safe-haven assets
like the yen, gold and government bonds that have been in demand
over the last week.
    Europe's FTSEurofirst 300 index climbed 1 percent 
as the main bourses in London, Frankfurt and
Paris all made ground and dollar-traded stocks in Moscow
 saw their first rise in almost two weeks.
    Wall Street futures pointed to U.S. markets starting
up around 0.3 percent and the rouble also firmed, trading 0.6
percent stronger against the dollar at 34.90 and
almost 1 percent on the euro at 47.10.
    "The separatists have reportedly met several of the key
demands coming from Malaysia and Western countries," Sberbank
Investment Research analysts said.
    The rebound in risk was also helped by more solid U.S.
company earnings and merger activity in the previous session,
though analysts remained wary about Ukraine and Russia given the
delicate nature of events.
    EU foreign ministers gather later in the day in Brussels to
discuss the situation and possibly recommend further sanctions
against Russia. 
    Russia's Security Council, headed by President Vladimir
Putin, is also due to meet in Moscow. 
            
    RUPIAH WOBBLE
    But with the market mood clearly more upbeat for the time
being, the dollar hit a six-week high as gold 
dipped about two dollars to $1,305 an ounce. 
    In Asian trading, MSCI's broadest index of Asia-Pacific
shares outside Japan rose about 0.75 percent to
reach its highest since 2011 as shares in China saw their
biggest gain in 2-1/2 months. 
    Most Asian currencies also climbed on the updraft. 
    Thailand's baht hit an eight-month high on hopes an interim
constitution planned by the military will stabilise the country.
    Indonesia's rupiah wobbled though as the likely
loser in its presidential election, former general Prabowo
Subianto, denounced the vote as undemocratic, creating confusion
about the official results. 
    Intense fighting in the Gaza Strip has also unsettled
investors in recent days, but international efforts to end the
conflict gathered pace, with U.S. Secretary of State John Kerry
holding talks in Egypt and U.N. Secretary General Ban Ki-moon
due to arrive in Israel later in the day. 
    However, there was no sign of any let-up in the fighting
around Gaza, with plumes of black smoke spiralling into the sky,
and Israeli shells raining down on the coastal enclave.
  
        
    U.S. DATA
    The various pockets of geopolitical uncertainty left the
yield on the benchmark 10-year U.S. Treasury - the
traditional go-to asset in times of tension - at 2.483 percent
in European trading, not far from its year low of 2.4 percent.
    Yields on 30-year Treasuries inched down to
3.263 percent from a U.S. close at 3.264 percent on Monday.
    Investors were also awaiting U.S. consumer prices data due
at 1230 GMT for clues to the timing of any monetary tightening
by the Federal Reserve.
    The Labor Department is expected to report that U.S.
inflation eased slightly to 0.3 percent in June, after rising
food prices pushed the index to its biggest increase in more
than a year in May.  
    "It will be interesting to see how euro dollar trades into
the CPI numbers," Saxo Bank head of FX strategy, John Hardy,
said.
    "If it's higher than expected, is it dollar positive on the
view that it pulls the Fed guidance forward on the first rate
hike? Or is dollar negative because the Fed is seen being
complacent on inflation and behind the curve?" he said.
    The dollar rose to a six-week high against a basket
of major currencies ahead of the data, pushing the euro firmly
back under $1.35 in the process, as worries about nearby
Ukraine and Russia also weighed on the shared currency. 

 (Additional reporting by Lidia Kelly in Moscow and Lisa
Twaronite in Tokyo; Editing by Louise Ireland)