No need to intervene in Italy crisis - European Central Bank sources

No need to intervene in Italy crisis - European Central Bank sources

No need to intervene in Italy crisis - European Central Bank sources

Stock markets recovered their poise Wednesday amid hopes for a resolution in Italy's political turmoil that may put a halt to talk of another election this year.

Short-dated Italian bond yields - one of the most sensitive gauges of political risk - soared as much as 80 basis points to their highest since late 2013 as investors' anxiety deepened. The May harmonized index of consumer prices (2.2% vs. 1.8% expected) and the May consumer price index from Germany (2.2% vs. 2.0% expected) were ahead of expectations.

ASIAN SCORECARD: Japan's Nikkei 225 index fell 0.1 percent to 22,171.35 and the Shanghai Composite index tumbled 0.7 percent to 3,075.14.

Traders said Chinese stocks were volatile as the long-awaited inclusion of large-cap shares from the country in MSCI's emerging markets index had failed to buoy the market or attract immediate flows of foreign money.

The euro recovered from its recent woes today on the back of strong eurozone inflation figures and increased optimism about the Italian political situation.

Looking at commodity-based currencies, against the Canadian dollar, the greenback Jumped by as much as 0.65 percent to trade at 1.2956 at the close, retracing most of the gains made by the loonie Wednesday on the back of a hawkish Bank of Canada statement. [.T][.SS] U.S. markets pointed to losses later, with the S&P500 E-Mini futures for the down 0.7 percent [.N]. -North Korean summit and the U.S. It had hit a 10-month low of $1.1510 on Tuesday.

But investors have dropped long-standing bets that the European Central Bank would hike rates in June 2019 amid signs of weaker economic growth in the euro zone and market turmoil associated with a political crisis in Italy. "And I expect that will be a good, healthy discussion", the official said. The climb in Italy's yields - yields move inversely to price - meant they were above the US equivalent for the first time in over a year.

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Attention is turning to the release Friday of United States jobs data, which will be scoured for clues about the Federal Reserve's interest rate plans ahead of next month's policy meeting.

Italy has been without a government since inconclusive elections on 4 March, when voters backed anti-establishment and far-right parties the 5-Star Movement and League Nord, leaving a hung parliament.

Salvini and Di Maio had agreed when they first tried to form a government that Giuseppe Conte, a little-known law professor, would be prime minister. Cottarelli is expected to announce his cabinet after the meeting.

ANALYST'S VIEWPOINT: "Worries over geopolitics look set to hit Asia after sweeping through Europe and also the the start of the week".

U.S. S&P500 mini futures rose 0.5 percent, but market holidays in the world's two biggest financial centers - London and NY - could make trading slow and illiquid for the day.

Spot gold was barely changed at $1,298.01 an ounce.

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