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.
Hopes of an Greek agreement, which had looked all but doomed a few days ago, as well as more traditional market support from German export data, lifted European shares and southern euro zone government bonds rallied. Still, investors were reluctant to make too big a move given past efforts to reach a Greek deal.
The pan-European FTSEurofirst 300 index .FTEU3 rose 2.3 percent to close at 1,511.64, while MSCI’s all-country world index .MIWD00000PUS of global equity performance gained 0.73 percent.
The Dow Jones industrial average .DJI closed up 33.2 points, or 0.19 percent, to 17,548.62. The S&P 500 .SPX gained 4.63 points, or 0.23 percent, to 2,051.31 and the Nasdaq Composite .IXIC added 12.64 points, or 0.26 percent, to 4,922.40.
Chinese markets helped boost the global mood as the main stock index .CSI300 rose 6.4 percent, recovering almost as much as it had lost the previous day. The Chinese securities regulator ordered shareholders with stakes of more than 5 percent not to sell for the next six months.
The rebound in China sapped this week’s gains by the Japanese yen JPY=, which tends to rise when markets turn risk-averse, and helped boost uneasy commodity markets.
Caution stirred by the Federal Reserve’s minutes on Wednesday had weakened the dollar.
The dollar was up 0.49 percent against the yen at 121.29 JPY=. The greenback also rose against the Swiss franc CHF=, up 0.3 percent at 0.9484 franc.
The euro, meanwhile, was down 0.4 percent against the dollar at $1.1030.
Yields on long-term U.S. Treasuries rose from this week’s five-week lows caused by worries about the Greek debt crisis and Chinese equities rout.
The benchmark 10-year U.S. Treasury note US10YT=RR was down 28/32 in price to yield 2.3067 percent.
Yields on 10-year German Bunds, the benchmark for euro zone borrowing costs, were up 4 basis points at 0.72 percent DE10YT=TWEB
Brent crude rose more than $2 a barrel at one point as supportive economic data from Germany, firmer stock markets and strong gasoline demand lifted oil prices.
Brent crude LCOc1 settled $1.56 higher at $58.61 a barrel and front-month U.S. crude futures CLc1 rose $1.13 to settle at $53.78 a barrel.
Reporting by Herbert Lash; Editing by Andrew Hay and Meredith Mazzilli