European stocks rebound from North Korea-fuelled losses

12:00 | 31/08/2017

LONDON: European stock markets rebounded on Wednesday (Aug 30) from heavy losses as US President Donald Trump's measured response to North Korea's missile launch reassured investors, dealers said.

Logo of the London Stock Exchange

European exchanges followed their Asian counterparts higher after overnight Wall Street gains, despite additional concern over tropical storm Harvey in the United States.

Markets were rocked on Tuesday after nuclear-armed North Korea fired a missile into Japanese airspace, deepening geopolitical worries while sending safe-haven assets like gold higher.

"Relief returned to markets on Wednesday after two-days of concern over North Korean missile threats and the huge damage inflicted on Texas by tropical storm Harvey," said market analyst Jasper Lawler at London Capital Group.

London closed 0.4 per cent higher, with Paris and Frankfurt gaining 0.5 per cent.

Seoul stocks - which shed 0.2 per cent on Tuesday - added 0.3 per cent, Tokyo advanced 0.7 per cent and Hong Kong rallied 1.2 per cent.

Meanwhile "Wall Street opened mixed with any confidence drawn from faster economic growth in the second quarter balanced by a warning from Donald Trump that 'Talking is not the answer' to North Korea," he added.

The Dow was flat approaching midday, while the S&P 500 and Nasdaq Composite both pushed higher.

DOLLAR BOUNCE

The greenback also bounced back, supported by bargain-buying and a strong consumer confidence reading, while dealers were upbeat about upcoming US jobs data on Friday.

The dollar had plunged on Tuesday to as low as 108.50 yen as dealers rushed for safe havens.

The greenback also picked up against the euro, a day after the single currency hit US$1.2070 - the highest level since Jan 5, 2015.

The euro has also been boosted by expectations the European Central Bank will soon start cutting down its stimulus, while talk of fresh Federal Reserve interest rate rises has eased.

Oil prices slid Wednesday on fears of a long-term shutdown of refining capacity in the oil-rich Gulf Coast region due to Harvey, which will dampen demand for crude.

"WTI and Brent Crude oil price continue to be weak as demand at refineries is down due to disruption caused by the tropical storm in the US," said market analyst David Madden at CMC Markets UK.

"Also playing in the refinery story is the high stockpiles of oil the US has encountered through much of this year, refineries are working their way through existing stockpiles rather than bringing in more," he added.

Key figures around 1530 GMT:

London - FTSE 100: UP 0.4 per cent at 7,365.26 points (close)
Frankfurt - DAX 30: UP 0.5 per cent at 12,002.47 (close)
Paris - CAC 40: UP 0.5 per cent at 5,056.34 (close)
EURO STOXX 50: UP 0.5 per cent at 3,406.18
New York - Dow: FLAT at 21,865.73

Tokyo - Nikkei 225: UP 0.7 per cent at 19,506.54 (close)
Hong Kong - Hang Seng: UP 1.2 per cent at 28,094.61 (close)
Shanghai - Composite: DOWN 0.1 per cent at 3,363.63 (close)

Euro/dollar: DOWN at US$1.1902 from US$1.1974 at 2100 GMT on Tuesday
Pound/dollar: DOWN at US$1.2916 from US$1.2919
Dollar/yen: UP at 110.24 yen from 109.75 yen

Oil - Brent North Sea: DOWN 16 cents at US$51.50 per barrel
Oil - West Texas Intermediate: DOWN 33 cents at US$46.11

AFP