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Markets Update in the Morning

  • Brent oil pushes above $50 for first time in nearly seven months

  • Gold rebounds, copper, zinc advance
  • dollar retreats
  • Nikkei flat as Yen gains

  • European Shares  mixed

Japanese stocks were flat  as indexes gave up earlier gains due to the yen’s rising strength against the dollar, gave up optimism over the profit outlook for exporters and other shares.

The Nikkei share average edged up 0.1 percent to 16,772.46 for its highest close in nearly a month.

Market players noted investors’ lack of conviction in the absence of strong catalysts as Japan hosts a two-day G7 leaders’ summit. Volume on the Tokyo Stock Exchange’s first section remained near mid-March lows and turnover was similarly subdued.

Shares of embattled air bag maker Takata Corp bucked the day’s weakness and soared 21 percent to the daily limit after the Nikkei business daily reported U.S. investment fund Kohlberg Kravis Roberts is interested in taking a 60 percent stake in the company.

China’s Shanghai Composite equity index is up 0.1 per cent, just above its lowest close since mid March, while Hong Kong’s Hang Seng is off 0.1 per cent, though underpinned by the global resource sector rally.

The STOXX Europe 600 was down 0.1 percent at 348.06, with the FTSEurofirst 300 flat. Both indexes hit a 4 week high in the previous session.

Britain’s FTSE 100, France’s CAC and Germany’s DAX were all 0.1 percent higher.

Banks fell 1.3 percent after a strong rally on Wednesday, led down by Banco Popular which slumped 25 percent after it announced a rights issue plan.

Other Spanish banks Caixabank and Banco de Sabadell fell 3.4 percent and 4.5 percent respectively

However, oil companies rose 0.6 percent after Brent crude hit $50 dollars a barrel, boosted by a drawdown in crude stocks in the United States last week.

Brent oil futures passed above $50 a barrel on Thursday for the first time in about seven months, boosted after U.S. government figures showed a sharper-than-expected drawdown in crude stocks last week.

“Geopolitical issues in West Africa and the Middle East, supply outages, increased demand and maybe a touch of a weaker dollar have all helped push prices higher,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

“I don’t think the rally will last because prices will reach a level that will bring U.S. shale oil output back into the market,” he added.

With Fed fund futures pricing in a one in three chance that the Fed will raise borrowing cost by 25 basis points at its meeting in June, the dollar and bond yields are easing back from recent multi-week highs.

Ten-year Treasury yields, which move inversely to the bond price, are off two basis points to 1.85 per cent as equivalent maturity German Bunds hold steady at 0.16 per cent.

 

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