World shares edged toward a six-month high on Tuesday following the biggest jump in Chinese stocks for over two years and an upbeat start for Europe
World shares edged toward a six-month high on Tuesday, as the biggest jump in Chinese stocks for over two years and an upbeat start for Europe followed Wall Street's best close since January.
The moves came despite a host of simmering global feuds. Oil prices ticked higher as the United States reimposed some sanctions on Iran, while the Turkish lira <TRY=> bounced back almost 2 percent from its worst day in a decade on Monday that had been prompted by a row with Washington.
There was some improvement overnight as Chinese stocks rebounded 2.7 percent on hopes of fresh government spending, following a four-day selloff that had knocked them down about 6 percent.
London <.FTSE>, Paris <.FCHI> and Frankfurt <.GDAXI> followed by rising 0.6 to 0.9 percent as Europe's investors cheered results from Italy's biggest bank UniCredit [.EU] and oil firms and miners gained on the rise in crude prices.
Societe Generale strategist Kit Juckes said that the Chinese have stabilised the Yuan, the lira hasn't been annihilated at morning so once the sharp FX moves have calmed down and as long as the (company) earnings are good, there is a more risk friendly environment.
Currency markets remained volatile although less so than in recent sessions as the dollar dipped.
The euro bounced to $1.1583 <EUR=> from a near six-week low despite a second day of disappointing German economic data, while Britain's pound <GBP=> made back some ground after Brexit worries had pushed it to an 11-month low.
Turkey’s lira recovered 1.7 percent from Monday's losses of more than 5 percent after Washington had moved to end duty-free access to U.S. markets for some Turkish exports.
Already struggling with inflation at 14-year highs near 16 percent and political pressure on the central bank not to raise interest rates, the lira’s year-to-date losses are nearing 30 percent as jitters about foreign currency debt payments rise.
Senior emerging markets economist at SMBC Nikko Securities, Kota Hirayama said currently the impact of the lira's slide is mostly contained within the country. But fears of a default will begin to increase if the currency keeps depreciating. Such a development could affect some European financial institutions.