China bounce snaps five-day equity sell-off

Thu Jul 9, 2015 4:45pm EDT
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By Herbert Lash

NEW YORK (Reuters) - World equity markets snapped a five-day sell-off and safe-haven assets like bonds, the Swiss franc and yen fell on Thursday as Beijing regulators halted a rout in Chinese stocks and Europe revived hopes Greece could be kept in the euro currency union.

Shares on Wall Street initially rebounded about 1 percent, having been dragged into the red for the year on Wednesday by the China crash, cliff-hanger talks on Greece and a benign yet unsettling glitch on the New York Stock Exchange.

China's securities regulator on Thursday stemmed the slide in local shares by forbidding selling by shareholders with large stakes in listed firms.

"The Chinese market has shown a nice rebound for a day but it is important to note that many of the owners are restricted from selling their shares and half the companies have suspended trading," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

Steve Goldman, principal of Goldman Management in Short Hills, New Jersey, said there was relief that China's sell-off didn't continue and that there doesn't seem to be any belligerent tone coming out of Greece. But by the end of the session, Wall Street had given up most of its gains.

"There was a bit more optimism this morning and then just a general fall-back as the day went on," said Giri Cherukuri, head trader at OakBrook Investments LLC, which oversees $1.3 billion in Lisle, Illinois.

European shares rallied more than 2 percent as Prime Minister Alexis Tsipras rushed to finalize a package of Greek tax hikes and pension reforms needed to win a new aid lifeline.

Without the money it will have to print another currency, probably leading to its exit from the euro.   Continued...

A trader works shortly after the opening bell on the floor of the New York Stock Exchange, July 9, 2015. REUTERS/Lucas Jackson