Global shares recover slightly, but Greece fears remain
TOKYO |
TOKYO (Reuters) – Asian shares recovered some ground on Thursday from the previous day’s sell-off, but investors found little reason to chase risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies.
Against a background of financial instability in Greece’s banking sector, European shares were set to start mixed, with financial spreadbetters predicting that major European markets would open between a 0.2 percent drop and a 0.1 percent rise. U.S. stock futures were up 0.6 percent.
Gold and the euro recouped most of their losses from Wednesday as signs of stability in share markets helped improve sentiment slightly, but Brent bore the brunt of general risk aversion, slipping to a near four-month low.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1 percent on short covering, after sliding more than 3 percent – its biggest one-day drop in six months – and hitting a new four-month low on Wednesday. The index has shed about 8 percent so far in May.
Bucking the general trend of recovery in Asia-Pacific, Australian shares fell to a four-month low, with banks easing on more signs of pressure on margins.
Japan’s Nikkei stock average .N225 gained 0.7 percent.
News on Wednesday that some Greek banks face emergency funding needs dealt a further blow to risk sentiment, already beaten down by worries about much slower economic growth in China, a fragile U.S. jobs market and a shock trading loss at JPMorgan Chase Co (JPM.N).
“May is typically a bear month for markets as players often look to take advantage of the saying, ‘sell in May and go away,’ but all the negative factors compounded to give momentum to sell risk assets indiscriminately,” said Bob Takai, general manager of Sumitomo Corp’s energy division, adding that the markets will likely remain depressed for the next two to three quarters.
The European Central Bank said it has stopped providing liquidity to some Greek banks that have not been successfully recapitalized.
Greece on Wednesday put a senior judge in charge of an emergency government to lead the nation to its second election in just over a month on June 17. The vote will likely determine whether the highly indebted country remains in the common currency area.
The head of the World Bank warned on Wednesday that a decision by Greece to leave Europe’s common currency zone would raise big questions about the impact on Spain, Italy and other euro zone countries
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