Wild week for markets ends quietly

Fri Aug 28, 2015 4:44pm EDT
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By Herbert Lash

NEW YORK (Reuters) - A volatile ride for global markets this week ended calmly on Friday even as lingering worries over Chinese economic growth and the Federal Reserve's plans to raise interest rates weighed on stocks, but oil rebounded sharply for a second day.

U.S. crude jumped more than 6 percent as a rally in gasoline prices and air raids in Yemen forced traders to scramble to cover short positions. U.S. crude gained 17.2 percent in two sessions, the second-largest two-day rise in 25 years.

Those Fed officials who are anxious to raise rates said at an annual global central bankers' conference in Jackson Hole, Wyoming that continued market turmoil may lead the U.S. central bank to delay tightening monetary policy beyond September.

The Fed is waiting to see how data and markets unfold over the coming weeks before deciding whether to raise rates at its meeting in mid-September, Vice Chair Stanley Fischer told CNBC.

Chinese stocks jumped for a second straight day, rising more than 4.0 percent, after authorities said pension funds managed by local governments will soon start investing 2 trillion yuan ($313.05 billion) in stocks and other assets.

The move was the latest response by Chinese authorities, including the People's Bank of China, to shore up the economy after they cut rates, lowered reserve requirements and injected liquidity into the banking system.

Stocks on Wall Street mostly edged higher at the close, as European equity markets did hours earlier, suggesting fears of Chinese contagion were overdone and that a U.S. rate hike is not the end of the world, said Andrew Wilkinson, chief market strategist at Interactive Brokers LLC in Greenwich, Connecticut.

"There's an element of throwing the baby out with the bath water. Everything got thrown out on that view," Wilkinson said.   Continued...

A trader works on the floor of the New York Stock Exchange shortly after the opening bell in New York August 27, 2015. REUTERS/Lucas Jackson