Global markets stabilised yesterday, with US and European equities rebounding as a comeback in oil prices drove up energy shares.
The yield on US five-year Treasuries climbed to session highs as the gains on Wall Street and domestic oil futures pared safe-haven buying that has been fueled by the deepening economic crisis in Russia.
The dollar pulled back from recent gains against the Russian rouble, which has been hammered due to worries about increased US sanctions and the effect of lower oil prices on Russia's struggling economy. The dollar of late bought 61.7 roubles, down nearly 10 per cent on the day.
Investors were looking ahead to the US Federal Reserve's final policy statement of 2014.
In a sign of America's brightening economic outlook, many analysts expect the Fed to remove language pledging to wait a “considerable time” before raising US interest rates.
“The market is preparing itself for a change in the Fed language,” said currency strategist Mark McCormick of Credit Agricole in New York.
The dollar recovered ground against the yen after data showed Japanese exports rose less-than-expected in November. A dollar index was up 0.4 per cent. Oil prices moved above $60 a barrel as US data showed falling crude inventories, stemming deep losses brought on by a supply glut and signals from Opec producers and Russia that they will not cut production. Brent crude was up 41 cents to $60.42 a barrel.
Wall Street's Dow Jones industrial average was up 0.92 per cent, and the S&P 500 gained 1.2 per cent to 1,996.70 after three days of losses. The S&P energy index was up 4.4 per cent.
The MSCI world equity index, which tracks shares in 45 nations, was up 0.19 per cent to 403.97 after posting losses earlier in the trading day.
The pan-European FTSEurofirst 300 index, which had spent much of the day in negative territory, was up 0.2 per cent, while the euro zone's blue-chip Euro STOXX 50 index rose 0.1 per cent.
US Treasuries prices slipped. The 10-year note fell 9/32 to yield 2.099 per cent. The yield on the five-year notes was last 1.567 per cent, up 4 basis points from Tuesday's close after it hit a session peak of 1.571 per cent earlier yesterday.
The global economy is ending the year in a fragile state, with weak growth in Europe and Japan and slowing demand in China.
US consumer prices recorded their biggest drop in nearly six in November as gasoline prices tumbled, according to government data.