Wednesday 28 September 2016

Europe shares fall, Turkish assets hit after jet shot down

Published 24/11/2015 | 10:34

European shares
European shares

European shares followed Asian stocks lower on Monday while a slightly weaker dollar eased the pressure on beleaguered metals that held near multi-year lows.

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Turkish stocks and the lira currency fell after Turkey said its planes shot down a warplane that had violated its air space near the Syrian border. Russia's defense ministry said one of its fighters was shot down over Syria.

Istanbul's BIST 100 index equity index was down 1.6 percent and the lira fell 0.6 percent against the dollar. Russian stocks also fell.

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The pan-European FTSEurofirst 300 index .FTEU3 fell 1.2 percent. The early damage was down by a 10 percent fall in Zodiac Aerospace after the company reported a 44.6 percent fall in annual earnings.

Travel and leisure stocks were also in focus after the U.S. State Department warned U.S. citizens of the risk of worldwide travel posed by what it called increased terrorist threats.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan wavered in and out of positive territory, and was last marginally lower.

Japan's Nikkei .N225 ended a choppy session with a 0.2 percent gain, after being closed on Monday for a holiday.

China's Shanghai Composite index closed up 0.2 percent while the ended almost flat.

The dollar dipped 0.2 percent against a basket of currencies, having hit an eight-month peak of 100 on Monday on expectations of an imminent rise in U.S. interest rates.

The euro was up 0.1 percent at $1.0647, having fallen as low as $1.0592 on Monday, while the yen was up 0.2 percent at 122.54 per dollar.

"With odds increasing for a rate hike in December, the debate will shift to whether future rate hikes will be slow and gradual," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

"In that case, there may be less justification for holding long dollar positions and for the index, the air above 100 could get rarefied."

Metals prices drew some relief from the slightly weaker greenback. Gold rose 0.3 percent to $1,073.16 an ounce but held near a 6 1/2-year low hit last week. Platinum hit its lowest since December 2008 at $831.80 but was last up at $844 per ounce.

Copper rose 0.6 percent to $4,518 per tonne but, along with aluminum, lead and nickel remained close to multi-year lows, weighed down by the prospect of higher U.S. interest rates and ebbing Chinese demand.

In debt markets, German 10-year Bund yields, the benchmark for euro zone borrowing costs, fell 4.0 basis points to just below 0.5 percent, having fallen 5 bps on Monday after surveys showed business activity unexpectedly accelerated to a four-year high.

Data on Tuesday showed German business morale rose in November. The Ifo institute said sentiment was largely unaffected by increased global security fears.

However, the stronger data left expectations of further policy easing from the European Central Bank undiminished.

"Even though the euro zone economy is doing reasonably well at the moment, the ECB is concerned about the downside risk to medium-term growth and inflation stemming from the weakness in emerging markets," RIA Capital Markets strategist Nick Stamenkovic said.

Oil prices rose after Saudi Arabia pledge on Monday to work towards oil price stability. Brent crude LCOc1 was last up 64 cents a barrel at $45.46.

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