Oil prices steadied at $50 a barrel after a 5 per cent drop and badly bruised commodity and Chinese markets were calmer generally on Tuesday, as investors attempted to shake off the recent turbulence.

European stocks reversed some of the previous day’s gains and safe-haven German government bonds were in demand as the region opened, but there was some respite for commodities and their related currency and share markets.

Brent oil, which has slumped more than 20 per cent over the last month, was up almost 1 per cent. Copper, seen as a bellwether of global growth, nudged off a six-year low and Chinese stocks bounced 3 per cent.

The dollar also helped relieve the pressure, with it pegged back by another bout of weak US data on Monday. Raw material reliant Canadian and Australian dollars both got lifts, alongside Russia’s rouble and other emerging FX.

The Aussie dollar was by far the biggest mover. It rose 1.25 per cent to an almost two-week high of $0.7375 after a major change in tone from its central bank that suggested it was now more satisfied with the currency level.

“You have had a key shift from the RBA that they don’t need to intervene as strongly, so that has triggered a considerable Aussie bounce,’’ said John Hardy, head of FX strategy at Saxo Bank.

“And the (US) dollar view is just flat and we are just waiting for payrolls on Friday. We have had a relatively hawkish set-up from Yellen and co (that interest rates may go up next month) but the rates market just doesn’t believe it.’’

The dollar edged down about 0.1 per cent on the day against its Japanese counterpart to 123.90 yen, while the euro was slightly higher at $1.0958.

European stock markets lost ground, with French bank Credit Agricole and German carmaker BMW among the worst performers after reporting disappointing results and as the recent drop in oil prices weighed on energy stocks.

Shares in Greece, which had slumped 16 per cent on Monday after re-opening following a five-week shutdown, also added to weak mood as they fell a further 4 per cent.

Data dependent

MSCI’s broadest index of Asia-Pacific shares outside Japan had turned positive and extended gains late in the session as China shares rose, while Japan’s Nikkei stock index kept losses to 0.14 per cent.

The Shanghai Composite Index ended more than 3.5 per cent higher and the CSI300 index added 3.1 per cent in a third day of gains.

Beijing has taken a raft of steps to support Chinese share markets after they lost more than 30 per cent of their value since peaking in June, but investors are still cautious.

“The market is still very volatile ... investors are likely to be quiet and see what the next step of the government will be,’’ said Patrick Yiu, a director of CASH Asset Management in Hong Kong.

“The overall market momentum is not likely to pick up anytime soon and the economy in China is still very weak,’’ Yiu said.

Fears of disinflation stemming from the rout in oil prices have led investors to pare bets that the US Fed’s long-awaited interest rate hike will come as early as September.

Durable goods and factory data will be out later today but Friday’s employment data is shaping up to be key for markets. They are expected to show the US economy created 225,000 new jobs in July, according to economists polled by Reuters. The unemployment rate is expected to hold steady at 5.3 per cent.

“If we get some certainty about the strength of the US economy and the likelihood of policy normalisation by the Fed, and if a rate hike seems justifiable, that is positive for sentiment... because a lot of people have been bracing for this,’’ said Stefan Worrall, director of cash equities at Credit Suisse.

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