Global shares, dollar recover after steep sell-off

Reuters: The dollar and world shares edged higher on Wednesday, clawing back some of the previous day’s steep losses as investors sought out bargains with one eye on central bank stimulus.

Concerns about the US Federal Reserve’s tapering its bond-buying program and the Bank of Japan’s commitment to its monetary stimulus sparked a broad sell-off of stocks, bonds and commodities on Tuesday.

The dollar, which chalked up its biggest one-day fall against the yen since May 2010 in the sell-off, recovered on Wednesday by about 0.5% to trade around 96.50 Yen.

The euro fell 0.25% against the dollar. European Central Bank Executive Board member Peter Praet said on Tuesday the ECB had room to cut interest rates further

European shares led the gradual recovery in global equity markets after another volatile session in Asia saw MSCI’s broadest index of Asia-Pacific shares outside Japan drop 0.4% to a 6-1/2-month low.

The sell-off was seen drawing some buyers back into the markets, and with US data providing only tentative signs of a recovery, currency strategists said it was increasingly unlikely that Fed stimulus would soon be cut back.

The pan-European FTSEurofirst 300 index gained 0.45 after having fallen to six-week lows in Tuesday’s sell-off.

Japan’s Nikkei stock average earlier extended its losses to close 0.2% though it was off its day’s lows. The Nikkei has now fallen some 17% from a 5-1/2-year high scaled last month when worries began to Bank of Japan’s commitment to tackle rising bond yields which threatened its stimulus plans.