World stock markets rebounded today as the fall in the Chinese yuan slowed and the country's central bank tried to dampen speculation of further devaluation.
European stocks jumped in early trading, with France's CAC 40 rising 1.8 per cent to 5,013.59. Germany's DAX gained 1.4 per cent to 11,078.39 and Britain's FTSE 100 added 0.8 per cent to 6,620.92. US stocks were poised to open higher.
Dow futures were up 0.2 per cent to 17,049.00 and broader S&P 500 futures rose 0.2 per cent to 2,089.30.
The Chinese currency fell for a third day but by late afternoon its decline was only 0.2 per cent compared with drops of up to 1.9 per cent on the previous days. It has dropped a total of 2.9 per cent since Tuesday.
The surprise move earlier this week to loosen the mechanism that controls the yuan and send the currency lower reverberated through global markets but the turmoil is now abating.
Sentiment was soothed further by comments from the central bank. The official reason for letting the tightly controlled yuan fall is to make it more responsive to market forces but a weaker yuan also gives a competitive boost to exports from China, where the economy is slowing.
The Chinese central bank's "opaque communications policy may well have led to panic over-selling earlier in the week," market analyst Angus Nicholson of IG said in a commentary.
"The markets have now digested the prospects of a CNY devaluation and are judging it as not as big of a risk as earlier."
Major Asian benchmarks finished higher after a two-day sell-off. Japan's Nikkei 225 rose 1 per cent to 20,595.55 and South Korea's Kospi gained 0.4 per cent to 1,983.46.
Hong Kong's Hang Seng climbed 0.4 per cent to 24,018.80 and the Shanghai Composite Index in mainland China added 1.8 per cent to 3,954.56 after briefly slipping into negative territory. Australia's S&P/ASX 200 advanced 0.1 per cent to 5,387.90.
The dollar rose to 124.57 yen from 124.26 yen in late trading yesterday. The euro slipped to USD 1.1112 from USD 1.1156.
Benchmark US crude rose 20 cents to USD 43.50 in electronic trading on the New York Mercantile Exchange. The contract rose 22 cents to close at USD 43.30 a barrel yesterday. Brent crude, an international benchmark, added 50 cents to USD 50.68 in London.
