In This Article:
* European stocks inch higher as gas prices retreat after spike
* Yen hits fresh 24-year low, euro, pound claw higher
* Bond markets expect super-sized 75 bps from ECB on Thursday
* Oil sags after modest OPEC supply cut
By Marc Jones
LONDON, Sept 6 (Reuters) - European stock markets, the euro and the pound all clawed higher on Tuesday as previously surging gas prices slipped back 10%, although government bond market costs continued to rise and Japan's yen hit a fresh 24-year low.
The mood was notably calmer after Monday's spooked reaction to Moscow's latest gas supply cuts. There was also hope that Britain's new prime minister Liz Truss would launch an instant relief package there, but the wounds from spiralling energy costs were plain to see in markets.
Even the euro's 0.45% morning rise couldn't get it above parity . The STOXX 600's bounce was a modest 0.25%, while Italy's bond yields held near 4% on bets the European Central Bank will have to hike rates by a record 0.75 later this week.
"Maybe it's natural that we take a bit of a breather here, but it's hard to see where the good news will come from," Abrdn investment director James Athey said.
Russia's gas would remain the "Damocles sword" hanging over Europe's economy he added, while the scale of interest rate rises likely to come and the risk of recessions was still not fully reflected.
"We are still in a strong dollar, weak risk environment for the foreseeable future," Athey said.
Sterling, which has been one of world's weakest major currencies over the last month, clawed up 0.5% as Liz Truss's installation as new UK prime minister fed expectations of a super-sized energy relief package in the coming days.
U.S. stocks looked set to open higher after Monday's Labor Day holiday, while China's yuan clawed off a more than two-year low in Asia after Beijing's latest stimulus effort had cut FX reserves requirements again.
The main stock markets there had barely budged though. MSCI's gauge of Asia-Pacific stocks outside Japan finished 0.02% in the red and Tokyo's Nikkei ended almost exactly where it started.
Yen sellers had hogged all the action, sending the currency to another 24-year low of 141.56 versus the dollar.
Moves in other crosses were even more stark. The euro jumped 1.2% to 141.2 yen and sterling gained 1.4% to 163.92 yen.
AUSTRALIA HIKES RATES AGAIN
In contrast the Aussie dollar was little changed after the Reserve Bank of Australia lifted its interest rate by another 50 basis points and signalled more were to come, with the caveat it was not on a pre-set path.