Share rally fades, markets watching diplomacy on Syria

Wed Sep 11, 2013 8:43am EDT
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By Marc Jones

LONDON (Reuters) - A week of gains for world stocks petered out on Wednesday and a sell-off in oil and core government debt eased, as talks began on trying to avert a U.S. military strike on Syria against a broadly calm market backdrop.

The safe-haven yen was near a seven-week low against the dollar and stood near multi-year lows against the euro and sterling, while shares in Europe nudged higher ahead of what was expected to be a flat start for Wall Street.

U.S. President Barack Obama said late on Tuesday that Russia's offer to push Syrian President Bashar al-Assad to put chemical weapons under international control could potentially head off the type of limited military action he was considering.

"Over the last few days, we've seen some encouraging signs," Obama said in televised speech from the White House.

Markets were largely in consolidation mode after the big moves of the two previous sessions when what looked to be a rapid move towards U.S. action was halted by Russia's plan.

Oil recovered some ground with Brent crude rising back above $112 a barrel from a 2-1/2-week trough of $110.59. The steadier performance came after a 4-percent drop in the past two sessions, its largest two-day fall since June.

Copper edged slightly higher to $7,196 a metric ton (1.1023 tons), while gold inched back up to $1,365.90 having slid to a three-week low of $1,356.85 an ounce.

"The calmer market mood is largely because the geopolitical risks have diminished," said Vasileios Gkionakis, global head of FX Strategy for UniCredit in London.   Continued...

A man walks through the lobby of the London Stock Exchange August 5, 2011. REUTERS/Suzanne Plunkett