(Repeats to give analyst’s name and title after first quote)
LONDON Aug 14 (Reuters) – Israeli shares and the shekel
picked up on Tuesday after sharp falls driven by a spike in
political risk, while emerging European currencies firmed
modestly and emerging stocks rose 0.7 percent on expectations of
more policy stimulus from global central banks.
Romania’s leu rose 0.25 percent to one-month highs
after data showed the economy pulled out of recession in the
second quarter.
“French and German GDP printed a bit better than expected
and that’s lifting sentiment a bit and translating into better
FX performance in emerging Europe,” said Luis Costa, head of
CEEMEA FX and debt strategy at Citi.
Israeli assets sold off on Monday amid an intensifying
debate on the prospects of war with Iran. But on
Tuesday Tel Aviv stocks rose 0.4 percent, recouping some of the
previous session’s 1.6 percent losses while the shekel firmed
0.3 percent.
It had lost 1.4 percent to the dollar on Monday, hitting
two-week lows. Israeli 5-year credit default swaps were
unchanged around 150 basis points after jumping 13 bps.
Costa called the selloff “rumour-driven price action”.
“Today we are past the panic wave and people are realising
its not a blow-up story yet,” Costa said. “But unfortunately,
all these fears will keep investors cautious when it comes to
buying anything in the region.”
Egyptian shares rallied 1.3 percent to 5-month highs
after Cairo took a decisive step towards civilian rule
and also received a $2 billion backstop from Qatar. But
political turmoil kept Kuwaiti shares near 8-year lows.
Broader emerging equities traded just off 3-month
highs thanks to a positive close in China and
better-than-expected GDP data from France and Germany. The euro
zone economy however contracted in the second quarter and a key
German business sentiment survey dropped.
Coming on top of lacklustre Chinese data, that has cemented
expectations for more policy stimulus ahead.
(Reporting by Sujata Rao; Editing by Hugh Lawson)
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