GLOBAL MARKETS-Shares pick up, dollar steady after bruising selloff

Last Updated: Fri, Jun 14, 2013 10:30 hrs

* Nikkei recovers 2 percent, Euro shares climb 0.3 percent

* Markets respond to upbeat US data, but sentiment fragile ahead of Fed meeting

* Dollar gains foothold against yen; position-unwinding continues

By Marc Jones

LONDON, June 14 (Reuters) - Stocks recouped some of their recent sharp losses and the dollar steadied on Friday, although both were limping towards a fourth straight week of declines driven by persistent doubts over central bank stimulus programmes.

Talk that the U.S. Federal Reserve, which meets next week, could begin reducing its bond buying later in the year has fuelled a selloff in global markets this week that has bruised stocks, bonds, emerging market assets and the dollar alike.

The U.S. currency remained sluggish against the yen and the euro on Friday morning but looked to have gained a foothold against the Japanese unit around 95 yen, having plunged to a two-month trough of 93.75 the previous day.

With better-than-expected U.S. retail sales data overnight bringing some relief to markets and with the impact of the selloff on riskier assets settling, top European stocks climbed 0.3 percent as they tracked a rebound in Japanese and Asian shares.

Markets have been spooked by the idea that the Fed could start reeling in its support, which has helped drive up asset prices over the last four years. But Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets, said with growth patchy, he didn't expect a Fed move before the end of the year.

"If you have easy monetary policy and improving economic conditions, which will also help companies to produce good earnings, ... then you have a lot of the building blocks in place (to drive stock market gains)," he added.

A number of major stock markets including MSCI's world index have fallen for four straight weeks now, with Europe on course for a drop of 1.5 percent this week. Japan's Nikkei is nursing losses since mid-May of more than 15 percent despite rebounding 2 percent on Friday.

The Japanese stock market has been on a roller coaster ride recently, hurt by the stimulus worries and an underwhelming package of pro-growth measures unveiled by the government.


In Europe's debt markets, southern euro zone bonds were back on the front foot after a mixed run of sessions, while German Bunds were also up, rising 43 ticks to add to this week's gains.

Rating agency Standard and Poor's helped sentiment towards the euro zone periphery as it kept Spanish government debt above 'junk' status, although it left the country at risk of a downgrade by maintaining a negative outlook on the bonds.

Commodities, especially metals, have largely avoided the dramatic swings seen by equities and currencies this week but have not been completely immune to the stimulus concerns.

Copper edged up to $7,094 a tonne as it inched off a six-week low hit on Thursday, while precious metals gold and platinum hovered near their recent lows.

Brent crude broke back above $105 a barrel for the first time in more than a month, although analysts said the volatile dollar would remain influential.

"The key driver of oil has been the weakness in the dollar rather than any fundamental factors," said Ric Spooner, chief market analyst at CMC Markets, who added that $106 would be a tough barrier to crack.

"Traders are wary about pushing things higher because they are confronted with a situation of plenty of supplies when seasonal demand is supposed to pick up," Spooner said.

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