By Marc Jones
LONDON (Reuters) - World share markets fought to regain their footing on Tuesday, as Turkey's lira pulled out of its recent nosedive and reassuring data from Germany helped offset the latest wobbles in China's giant economy.
After three weeks of heavy pounding, Turkey's lira finally got some respite as signs the country's authorities were trying to address the situation triggered a 5 percent relief rally to 6.5 per dollar.
Yet it had lost almost 10 percent on Monday alone and nerves were briefly tested again as Turkey's President Tayyip Erdogan urged Turks to boycott U.S. electronic products in response to recent criticism from Washington.
The rot also stopped for the South African rand, the Russian rouble and the Brazilian real. Argentina's central bank unexpectedly raised interest rates by 5 percentage points on Monday. Even so, the peso hit a record low.
"These things get very volatile in both directions once you have had a really big move," Saxo bank's head of FX strategy John Hardy said. "To suggest this thing is over, you would have to see that Turkey is isolated... I'm not there yet and I don't think the market is there yet."
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European shares also steadied after two days of selling as anxieties over contagion from the Turkish currency crisis eased.
After falling to a 21-month low on Monday, euro zone bank stocks initially rose 0.8 before slipping back again, while the cross-sector pan-European STOXX 600 benchmark and Wall Street futures both climbed.
Sentiment was helped as data showed that Europe's largest economy, Germany, picked up more steam than expected in Q2, although the markets' bounce might have been stronger had surveys from China not proved softer than expected.
Chinese retail sales, industrial output and urban investment all grew by less than forecast in July, a triple dose of disappointment that underlined the argument for more policy stimulus in China as trade risks also intensify.
The Shanghai blue-chip index closed down 0.5 percent and weighed on MSCI's broadest index of Asia-Pacific shares outside Japan, which eased 0.1 percent.
Moves elsewhere were mixed. Japan's Nikkei rose 2.3 percent and Australian stocks added 0.8 percent. EMini futures for the S&P 500 were still a fraction higher and 10-year Treasury yields held at 2.88 percent.
EMERGING CONCERNS
Investors were encouraged that U.S. declines had been only minor on Monday after the losses by the lira and other emerging-market currencies. The Dow ended Monday down 0.5 percent, the S&P 500 lost 0.4 percent and the Nasdaq fell 0.25 percent. [.N]
MSCI's benchmark emerging market equities index touched its lowest level since July 2017 in Asian trading though, taking losses since late January to just shy of the 20 percent threshold generally accepted to be a 'bear market'.
"The more significant emerging-market concern relates to the risk that regional underperformance becomes a source of disruption through swings in capital flows and currencies," said Matt Sherwood, head of investment strategy at Perpetual.
"While the focus at present is on Turkey, where currency depreciation and rising rates has translated into a marked tightening of financial conditions, it could spread to Mexico, Brazil and India."
Sherwood cited the NAFTA negotiations as a key risk for Mexico and upcoming elections in Brazil and India as potential threats for those two markets.
GOLD LOSING ITS LUSTRE
The day's rise in risk appetite saw bond yields in Spain and Italy dip, although the euro was still struggling at $1.1407, having touched its lowest since July 2017 on Monday.
It also reached one-year lows against the yen and Swiss franc, safe harbours in times of stress.
The dollar was a touch firmer at 110.89 yen, having hit a six-week trough around 110.10 on Monday. Against a basket of currencies, the U.S. currency was barely budged at 96.300.
In commodity markets, gold briefly slid to its lowest since late January 2017. It was last at $1,195 an ounce.
U.S. government data last week showed that gold speculators had lifted their bearish bets to a record.
Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust GLD, have dropped about 10 percent from their April peak and are at their lowest since February 2016.
Oil prices rose after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply.
Brent gained just over a dollar to $73.74 a barrel while U.S. crude added 99 cents to $68.18.
(Additional reporting by Wayne Cole in Sydney, editing by Larry King and Jon Boyle)