European markets turned higher in afternoon trading on Wednesday, trying to break a fall that has permeated markets for most of the week.
The push in Europe followed declines in Asia, where the Nikkei in Tokyo and Hang Seng in Hong Kong both dropped more than 1.3 percent. The dollar weakened against the euro and yen, and subsequently, both gold and oil turned higher.
The decline in Asia was led by finance and mining companies, after Japan’s economy grew more slowly than estimated and investors turned jittery after Greece’s debt rating cut.
The Mitsubishi UFJ Financial Group, Japan’s biggest publicly traded bank, sank 5.2 percent in Tokyo. Nissan Motor, a Japanese automaker that gets 35 percent of its revenue from North America, slumped 3.4 percent as the dollar weakened against the yen. Newcrest Mining, Australia’s largest gold producer, slipped 1.6 percent after the price of the metal dropped for a fourth day.
“Investor sentiment is worsening because of the reignited uncertainty about credit,” said Naoteru Teraoka, who helps oversee about $16 billion in Tokyo at Chuo Mitsui Asset Management Company. “There’s uncertainty about the future and companies are cautious.”
In Europe, traders were trying to overcome those concerns about Dubai and Greece.
The FTSE 100 in London was 14 points higher in afternoon trading after spending most of the morning in negative territory.
British banks rebounded after analysts tried to calm concerns about the Dubai debt situation.
“There seemed to be some progress made on rescheduling the ... Dubai World debt, and that’s one of the reasons that the U.K. banks might have come back off the recent lows,” said Stephen Pope, chief global market strategist at Cantor Fitzgerald.
Also helping ease some concerns over banks’ exposure to Dubai, Standard Chartered, an Asia-focused bank, said any losses it suffered in the emirate were unlikely to be material and it was on track for a record profit this year.
The DAX in Frankfurt was also 14 points higher and CAC-40 in Paris rose 9 points.
“Greece’s debt problems are more of a nuisance than Dubai’s woes, because a number of European banks have stakes in local lenders or are exposed to the country’s debt, and it revives the specter of a domino effect in East Europe,” said David Thebault, head of quantitative sales trading at Global Equities in Paris.
“But over all, the risk is limited for European equities,” he said. “We’ve been retreating over the past few days, but stocks are still moving in a range, although closer to the bottom of the range. The chances of seeing a Christmas rally are intact.”
On Wall Street, shares look to rebound from the declines on Tuesday, when both the Dow Jones industrial average and the Standard & Poor’s 500-stock index declined 1 percent.
Ahead of Wall Street’s open, the Mortgage Bankers Association said demand for home loans had risen to the highest level in about two months, mainly from borrowers locking in low rates by refinancing.
Nearly three of every four loan requests last week was for a refinancing, the industry group said. Demand for loans to buy a home increased by 4.0 percent, while refinancing applications jumped 11.1 percent last week, to 3,185.9 points in the group’s refinance index. This was the highest refinance index level in about two months.
In the commodities market, gold rose, recovering from the three-week lows it hit in the previous session, as the dollar weakened.
But an analyst at Standard Bank, Walter de Wet, said gold will likely struggle to return to the record highs of $1,226.10 an ounce it hit last week.
“We will see more upside in gold, but we don’t think we will see it in the next few weeks,” he said.
Yields on benchmark 10-year United States Treasuries were up 1 basis point at 3.399 percent, while those on 10-year Bund were down 1 basis point at 3.146 percent.
