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Stocks and oil stabilise after stormy start September

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Data drives bets on U.S. and European interest rate cuts

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JPMorgan throws in towel on bullish China stocks call

By Marc Jones

LONDON, Sept 5 (Reuters) - World share and oil prices

stabilised on Thursday after savage starts to September, while

the yen climbed to a one-month high and government bond markets

rallied as investors stuck with rate cut trades.

The storms, which have wiped off more than $2 trillion from

global stock markets and battered commodities, had eased just

enough to mean Europe's main bourses were able to

hold their ground early on after losing nearly 2% in recent

days.

German industrial orders data came in stronger than

expected, euro zone retail sales figures were in line with

forecasts and a flurry of key U.S. data was due both later and

on Friday in the form of non-farm payrolls.

Bets that the U.S. Federal Reserve might now start its

long-awaited rate cutting cycle with a bumper half point move

this month kept the dollar on defensive.

The Japanese yen, which has surged nearly 2% this

week, remained the biggest beneficiary. It hit a one-month high

of 143.20 per dollar overnight before shuffling back to 143.61

in European trading.

In the debt markets, Euro zone bond yields fell for a third

straight session and U.S. Treasury yields were at 3.765% as

investors continued to worry about the health of the key global

economies.

Data on Wednesday had showed U.S. job openings fell to their

lowest level in 3-1/2 years in July. Markets are now pricing in

a 44% chance of a 50 basis points Fed cut at the bank's Sept.

17-18 meeting and 110 bps of easing before the end of the year.

"The market is jittery," Jefferies analyst Mohit Kumar said.

But "we are keeping our modest long in risky assets despite

recent moves. We do not see the (U.S.) economy slowing down as

much as feared."

CHALLENGING

China's economy is still spluttering badly too despite a

sequence of stimulus efforts, including for its long-troubled

property market.

Wednesday had seen heavyweight investment bank JPMorgan

throw in the towel on its long-held bullish call on Chinese

stocks, although the reaction from the country's bluechips on

Thursday was a modest rise.

Commodities traders were also licking their wounds. Oil

clawed back above $73 a barrel having slumped over 7%

since the start of September. Bellwether metal copper inched

back up towards $9,000 having plunged almost 20% since May.

"September has historically been a challenging month for

risk assets," said Daniel Tan, a Singapore-based portfolio

manager at Grasshopper Asset Management.

Wall Street stock futures were also pointing to a

fractionally higher restart later. Investors' focus will be

on how 'Magnificent Seven' darling Nvidia ( NVDA ) fares after its recent

beating and the day's services sector and jobless claims data.

San Francisco Fed President Mary Daly said on Wednesday that

the Fed now needed to cut interest rates to keep the labour

market healthy and that incoming economic data will determine by

how much.

(Editing by Ros Russell)