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London - A string of reversals from sharp moves the previous day marked global financial market trading on Wednesday, with stocks and oil gaining ground and the US dollar falling after its biggest rally in two years.
In early European trading, the dollar was down around a third of one percent against a basket of currencies, after jumping 1.3% on Tuesday, its biggest rise since July 2013.
Brent crude and WTI oil futures were up 1%, while the major European stock markets gained as much as 0.5% and US futures pointed to a higher open on Wall Street following Tuesday's 1% slide, its biggest fall in three weeks.
There are no major US or European economic data due on Wednesday, leaving traders to ruminate on the timing of the first US interest rate hike and the latest twists in the Greek debt talks saga.
"The dollar had a strong rebound (on Tuesday) on the back of slightly better than expected US durable goods and consumer confidence data, but that rebound has been short-lived," said Angus Campbell, senior analyst at FXpro in London.
Greece and its European creditors have played down fears that Athens would default on a payment to the International Monetary Fund next week. Greece could avoid the June 5 payment without defaulting if it lumps together all IMF repayments due in June and pays them at the end of the month.
Currency analysts at SocGen said Wednesday "has the feel of an in-between day."
At 10:00 the euro was back above $1.09, up 0.4% on the day, while the dollar was down slightly against the yen dipping below ¥123.00, having scaled that level on Tuesday for the first time in almost eight years.
The FTSEuroFirst 300 leading index of 300 top European shares was up a third of 1% at 1 607 points and Britain's FTSE was up 0.4% at 6 975 points.
Germany's DAX was flat and France's CAC was up 0.1%.
Energy shares were in demand across the continent, with the STOXX Europe 600 oil and gas index rising 0.4% as oil prices rebounded on expectations that US crude stocks could fall for a fourth straight week.
Asian shares took their cue from Wall Street's weakness on Tuesday, and the MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.8%. Shares in Australia dropped 0.8%, South Korea fell 1.7% and Hong Kong eased 0.6%.
But Tokyo's Nikkei, supported by the yen's fall to an 8-year low this week, bucked the trend and rose 0.2%.
US normalisation
In bond markets, the 10-year German Bund yield was flat at 0.555%, while the comparable Spanish yield was down 3 basis points at 1.82%, having shot up the previous day on political concerns.
Voters in Spain punished the ruling Popular Party in local elections over the weekend after years of austerity policies. .
The 10-year US Treasury yield was up a basis point at 2.14%, and the two-year yield up four basis points at 0.65%.
Indicators on Tuesday showed that US business spending plans increased, consumer confidence improved and house prices extended gains. The data supported the stance taken by Federal Reserve Chair Janet Yellen, who said on Friday the central bank could hike rates this year if the economy keeps improving.
"Conditions have normalised considerably in recent years. As Yellen noted, if this process of normalisation continues, then monetary policy is likely to normalise correspondingly," said Goldman economist David Mericle.
Commodities took heart from the dollar's weakness on Wednesday.
After tumbling nearly 3% on Tuesday, US crude was up 1% at $58.65 a barrel, while Brent gained 0.9% to $64.27 a barrel.
Gold edged up from Tuesday's two-week low to trade at $1,189 an ounce.
