European stocks recover in cautious trade
European stock markets largely recovered Wednesday following the previous session's sharp losses that were triggered by political turmoil in Italy. The euro pulled back from 10-month lows against the dollar, which were struck Tuesday as turmoil in Italy sparked a frantic dash for safety. Asia's stocks tumbled Wednesday, with markets across the region catching up with the sharp losses in Europe and on Wall Street on Tuesday. Global markets have been sent into a tailspin as a political crisis unfolding in Rome has thrust the stability of the eurozone and European Union back on to the agenda. "Risk aversion in financial markets is increasing in response to the Italian political crisis," noted VTB economist Neil MacKinnon. "Unsurprisingly, Asian equity markets were badly dented overnight, though European equity markets are somewhat steadier... following the initial knee-jerk reaction." In late morning deals Wednesday, London's benchmark FTSE 100 index was up 0.2 percent, having shed 1.3 percent Tuesday. In the eurozone, Frankfurt's DAX 30 gained 0.5 percent and the Paris CAC 40 lost 0.3 percent. Milan's FTSE MIB rallied 1.5 percent, having tumbled 2.7 percent Tuesday. Italy was plunged into crisis when President Sergio Mattarella at the weekend vetoed the nomination of a fierce eurosceptic as economy minister, leading the prime minister-designate to step down and upending a bid by the anti-establishment Five Star Movement and the far-right League to form a government. Mattarella then named Carlo Cottarelli, a pro-austerity economist formerly with the International Monetary Fund, to lead a technocrat government, with another election likely in a few months. The chaotic developments have spooked investors, who fear another election will essentially be seen as a referendum on the country's future in the eurozone. Adding to the selling pressure was a brewing crisis in Spain, where Prime Minister Mariano Rajoy faces a no-confidence vote after his party was found guilty of benefiting from illegal funds in a massive graft trial. In Asia on Wednesday, Tokyo ended down 1.5 percent, Hong Kong lost 1.4 percent and Shanghai slumped 2.5 percent. Sydney gave up 0.5 percent, Singapore dived 1.9 percent and Seoul was two percent lower. Taipei, Kuala Lumpur and Manila were also sharply down. The turmoil has sent also the yield spread between Italy and Germany's 10-year bonds to around a five-year high, reflecting investor concerns. Investors have been spooked also by US President Donald Trump's decision Tuesday to press ahead with imposing tariffs on Chinese goods despite ongoing talks to resolve the dispute. The White House said the sanctions announced in March, largely focused on intellectual property, were still in the works and details would be announced in the coming month. China said the move breached a consensus reached between Washington and Beijing earlier this month that called off a threatened trade war. - Key figures around 1030 GMT - Milan - FTSE MIB: UP 1.5 percent at 21,676 points Madrid - IBEX 35: UP 0.4 percent at 9,557.40 London - FTSE 100: UP 0.2 percent at 7,650.54 points Paris - CAC 40: DOWN 0.3 percent at 5,424.32 Frankfurt - DAX 30: UP 0.5 percent at 12,732.13 EURO STOXX 50: UP 0.3 percent at 3,437.13 Tokyo - Nikkei 225: DOWN 1.5 percent at 22,018.52 (close) Hong Kong - Hang Seng: DOWN 1.4 percent at 30,056.79 (close) Shanghai - Composite: DOWN 2.5 percent at 3,041.44 (close) New York - DOW: DOWN 1.6 percent at 24,361.45 (close) Euro/dollar: UP at $1.1610 from $1.1537 at 2100 GMT Euro/yen: UP at 126.34 yen from 125.45 yen Pound/dollar: UP at $1.3267 from $1.3258 Dollar/yen: UP at 108.81 yen from 108.68 yen Oil - Brent Crude: UP 45 cents at $75.84 per barrel Oil - West Texas Intermediate: UP 29 cents at $67.02 burs-bcp/spm
