Oil recovered from a heavy fall yesterday but European stocks and the biggest emerging market currencies tumbled for a second day, as investors retreated in the face of rising global borrowing costs.

German Bund yields hit their highest in 1-1/2 years as a sell-off in European stocks and bonds snowballed. Wall Street was set to fall for the first time in four days, while the dollar started to backslide again.

With the Federal Reserve sending mixed signals on its balance sheet plans, investors were focusing on US jobs data due today. A summit of G20 nations has also taken on greater significance following this week’s test of a long-range missile by North Korea.

Bond yields, which drive global borrowing costs, pushed higher again ahead of US trading with benchmark US Treasury yields testing 2.4 per cent as they rose for a sixth day in the last seven.

Bund led European yields higher too, with comments from the ECB’s chief economist stressing ahead of the bank’s latest meeting minutes that it needed to keep a “steady-hand policy” doing little to change the sentiment.

The minutes themselves then showed policymakers had last month discussed dropping their pledge to expand or extend the bank’s bond-purchase programme if necessary.

“If confidence in the inflation outlook improved further, the case of retaining this (easing) bias could be reviewed,” the ECB said in the accounts of its June meeting.

Commodity markets continued to swing wildly.

Brent oil was at $48.54 a barrel ahead of US trading as it recovered 1.5 per cent of a four per cent drop seen on Wednesday when rising Opec exports raised fresh questions about the group’s plans to cut global supply.

Gold was down near an eight-week low at $1,222, though industrial metal aluminum hit its highest in more than five weeks as worries about Chinese supply were fanned by market talk that local smelters would be forced to shut capacity.

US stock futures pointed to a 0.3-0.4 per cent dip for Wall Street’s S&P 500 and Dow Jones indexes while the dollar was stalled at 113.32 Japanese yen and $1.1383 per euro.

Traders were wary though of making sudden moves, with a flurry of US data looming or already arrived, including ADP employment, ISM non-manufacturing PMI and the initial jobless claims report, all of which are appetizers ahead of today’s Payrolls numbers.

European stocks were pushed to their lowest in over two months by the day’s sell-off while the pound slipped back below 88 pence to the euro as Brexit tensions re-emerged in Brussels.

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