Ruble rocked, strong U.S. job numbers awaited
Reuters
Published Nov 07, 2014 06:57AM ET
Ruble rocked, strong U.S. job numbers awaited
By Patrick Graham LONDON (Reuters) - A deepening crisis of confidence in the ruble dominated European financial markets on Friday, with signs the head of Russia's central bank was discussing her options helping the currency recover some of this week's more than 10-percent slide.
As investors awaited monthly U.S. jobs data, European shares saw choppy trade, with bank stocks falling back and miners and metals firms improving. The FTSE Eurofirst index of leading European shares (FTEU3) was marginally lower, having given back some early gains.
The ruble's collapse -- and the broader problems around Ukraine and lower oil prices which it reflects -- are likely to put yet more pressure on exports by European companies already struggling with very poor demand at home.
With the currency battered by concerns about the conflict with Ukraine and the tit-for-tat sanctions that have resulted, Russia's central bank scaled back its support for the ruble earlier this week.
Expectations the central bank might step strongly back into the market after limiting intervention to $350 million daily helped turn back the bulk of an initial 3-percent fall on Friday. But the pressure remained.
"This is full-blown panic, with signs of a self-fulfilling currency crisis," Dmitry Polevoy, chief Russia economist at ING Bank in Moscow, said in a note.
"At such times, the central bank should intervene -- after all, if this isn't a risk to financial stability, then what is?"
A source told Reuters that bank Governor Elvira Nabiullina was holding a meeting but would not reveal more details.
President Vladimir Putin held talks with security chiefs on Thursday over a "deterioration of the situation" in eastern Ukraine after pro-Russian rebels there accused Kiev of launching a new offensive in violation of a ceasefire.
The dollar was worth 47.23 rubles, having traded as high as 48.65 rubles earlier. <RUBUTSTN=MCX>
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Asian stock markets edged down overnight ahead of the U.S. employment numbers, due at 1330 GMT (8.30 a.m. EST), while the euro recovered marginally from around two-year lows hit after a European Central Bank meeting on Thursday.
As European stock markets turned marginally lower, traders cited unease over whether the ECB has the ability to do enough to awaken an increasingly moribund economy.
The STOXX 600 Europe banks index was down 1.2 percent, with France's Credit Agricole down 4 percent and National Bank of Greece down 7 percent.
"Given the fact that we've had some weak results in terms of loan growth at French banks, with loan growth even negative at Credit Agricole (PA:CAGR), there are fears of a real slowdown happening at these banks," said BESI analyst Shailesh Raikundlia.
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UK equities were the big outperformers, up 0.5 percent, with the mining sector benefiting from a rebound.
Solid gains in U.S. employment are projected from the numbers later on Friday, which could increase speculation the Federal Reserve will raise interest rates in the middle of next year. That continues to support expectations of a sustained rally in the dollar, up for the third consecutive week.
"We are expecting a reading of 240,000 (new jobs) and anything above that, in the region of 250,000 could send the dollar higher," said Geoff Yu, currency strategist at UBS, London.
The dollar bought 115.14 yen <USD/JPY>, not far from a fresh seven-year peak of 115.52 touched overnight. The euro inched up to $1.2402<EUR/USD> after brushing a more than two-year low of $1.2368. Brent crude recovered from earlier losses to trade 0.2 percent higher at $83.09 a barrel, while U.S. crude was up almost half a percent at $78.28.
(Additional reporting by Vladimir Abramov in Moscow and Lionel Laurent in London; Editing by Catherine Evans and John Stonestreet)
Written By: Reuters
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