World markets were hit on Wednesday by a meltdown in Chinese markets,
a slump in commodities and questions over whether Europe could save
Greece.
European trading got off to a steady start, even though
stocks had plunged 6.75% in China, where the country's regulator warned
investors were being gripped by "panic sentiment".
That put all of Asia into a tailspin. Hong Kong dropped 8%, and Japan's Nikkei and stocks in Australia took heavy blows, leaving investors only the yen and safe-haven government bonds for refuge. The yen rose to a six-week high against the dollar.
The wave of global uncertainty also left traders wondering whether Federal Reserve meeting minutes due later, normally a market mover, would provide much value considering the real-time risks.
Beijing has taken a series of steps to stabilise its turbulent markets in recent weeks, but with little success so far. Nick Lawson, a managing director at Deutsche Bank in London, said the authorities now had two choices.
let the unwind run its natural course and deal with the fallout or manipulate the market but run the risk that this will entail so many impediments to free trade that index providers and foreign investors will be discouraged from entering the market for a long time."
Eurozone leaders on Tuesday gave Athens until the end of the week to come up with proposals for reforms in return for loans. Without the aid, Greece is likely to crash out of Europe's single currency.
One of the European Central Bank's top policymakers, Christian Noyer, said without a deal the ECB would pull the emergency funding that is now keeping Greece's banks alive.
"Our rules oblige us to stop immediately at the point when there is no prospect of a political accord on a programme, or at the point when the Greek banking system crumbles - which would happen if it enters generalised default on all its debts," he said.
But European investors managed to stay hopeful that a deal was still possible. The pan-regional FTSEurofirst 300 snapped a four-day losing streak, led by Italian and bank stocks.
The euro also climbed back to $1.1035 and southern eurozone government bonds made ground as risk appetite tentatively recovered.
That put all of Asia into a tailspin. Hong Kong dropped 8%, and Japan's Nikkei and stocks in Australia took heavy blows, leaving investors only the yen and safe-haven government bonds for refuge. The yen rose to a six-week high against the dollar.
The wave of global uncertainty also left traders wondering whether Federal Reserve meeting minutes due later, normally a market mover, would provide much value considering the real-time risks.
Beijing has taken a series of steps to stabilise its turbulent markets in recent weeks, but with little success so far. Nick Lawson, a managing director at Deutsche Bank in London, said the authorities now had two choices.
let the unwind run its natural course and deal with the fallout or manipulate the market but run the risk that this will entail so many impediments to free trade that index providers and foreign investors will be discouraged from entering the market for a long time."
Eurozone leaders on Tuesday gave Athens until the end of the week to come up with proposals for reforms in return for loans. Without the aid, Greece is likely to crash out of Europe's single currency.
One of the European Central Bank's top policymakers, Christian Noyer, said without a deal the ECB would pull the emergency funding that is now keeping Greece's banks alive.
"Our rules oblige us to stop immediately at the point when there is no prospect of a political accord on a programme, or at the point when the Greek banking system crumbles - which would happen if it enters generalised default on all its debts," he said.
But European investors managed to stay hopeful that a deal was still possible. The pan-regional FTSEurofirst 300 snapped a four-day losing streak, led by Italian and bank stocks.
The euro also climbed back to $1.1035 and southern eurozone government bonds made ground as risk appetite tentatively recovered.
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