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GLOBAL MARKETS-Europe shakes off North Korea jitters

Published 2017-09-05, 05:59 a/m
© Reuters.  GLOBAL MARKETS-Europe shakes off North Korea jitters
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* Investors shrug off nuclear test concerns

* Euro zone data helps European stocks, euro

* Asia markets subdued, Putin warns on N.Korea crisis

* Copper at 3-yr high but gold edges lower

By Marc Jones

LONDON, Sept 5 (Reuters) - Europe's financial markets seemed on Tuesday to have shaken off jitters prompted by North Korea's biggest nuclear test yet, with stocks pushing higher and investors reversing out of bonds, gold and other safe-haven assets.

As with many political risk plays over the past couple of years, market moves suggested a reluctance to price in tail risks on every possible bad outcome and more of a focus on the prosaic but upbeat global economic picture.

Confirmation that euro zone business activity remained robust last month helped the pan-European STOXX 600 .STOXX to claw back most of the 0.5 percent it lost on Monday amid international condemnation of the previous day's nuclear test .EU .

The euro EUR= and European government bond yields GVD/EUR also tiptoed higher as risk appetite tentatively returned and the data, which also showed rising inflation pressures put the focus back on Thursday's European Central Bank meeting. /FRX

Gold - the traditional go-to for traders when political concerns escalate - eased too, dipping back from a one-year high in its first drop in four days. GOL/

"What the recent episodes have shown is that you should not really try to follow these things as they tend to fade quickly," said ING's chief EMEA FX and rates strategist, Petr Krpata.

"It is less and less surprising for markets every time, so for us it is not a reason to change our constructive view on carry currencies."

Wall Street, which was closed on Monday, was expected to edge down around 0.2 percent when it reopened to bring it in line with the previous day's global dip. .N

ASIA SUBDUED

Overnight China's Caixin/Markit services purchasing managers' index (PMI), a forward-looking economic indicator, rose to 52.7 in August, the highest reading in three months. market reaction to that was muted, however, with sentiment in Asian equity markets still subdued. Chinese bourses eked out small 0.2-0.3 percent gains .SS but Seoul .KS11 and Tokyo .N225 remained red.

South Korea's Asia Business Daily, citing an unidentified source, reported North Korea had been observed moving a rocket that appeared to be an intercontinental ballistic missile (ICBM) possibly in preparation for a launch. at a summit of the world's biggest emerging economies in China, Russian President Vladimir Putin again warned that threatening military action against North Korea could trigger "a global catastrophe". condemns North Korea's exercises, we consider that they are a provocation ... (But) ramping up military hysteria will lead to nothing good," he told reporters.

In commodity markets, U.S. WTI oil prices edged higher, while U.S. gasoline prices RBc1 slumped to pre-Hurricane Harvey levels, as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity, easing supply concerns. O/R

U.S. West Texas Intermediate (WTI) crude futures CLc1 ticked up 0.2 percent to trade at $47.38 per barrel, though global benchmark Brent prices barely budged at $52.37.

The reassuring China PMI data helped copper CMCU3 hit a three-year high in industrial metals markets, and nickel hovered near a 14-month peak. MET/L

Meanwhile, bitcoin BTC=BTSP dropped further from Saturday's all-time high of $4,979.9 to trade at $4,012.

China said on Monday it was banning the practice of raising funds through launches of token-based digital currencies, known as initial coin offerings (ICOs).

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