Stocks, Treasury yields and the pound pared losses, as speculation swayed back and forth over the likelihood of Britain leaving the European Union.
The S&P 500 Index erased almost all of a one per cent drop while futures on the Euro Stoxx 50 climbed back amid a steady intra-day easing in bookmaker odds for Britain leaving the European Union. The yield on 10-year Treasuries wiped out most of its retreat. Gold and the yen maintained gains after Federal Reserve Chair Janet Yellen said Wednesday the UK vote on EU membership was a factor in deciding to hold interest rates steady, boosting demand for havens amid worries about slowing global growth.
Traders noted the rebound in equities coincided roughly with a deterioration in odds that Britons would elect to leave the EU as tracked by Oddschecker's survey of bookmakers' implied probability. Those odds slipped below 39 after surpassing 44 hours earlier. Campaigning for the Brexit referendum was suspended for the rest of Thursday by both sides after news that UK Labour Party lawmaker Jo Cox died after being attacked as she met constituents in her electoral district.
Cox, a vocal supporter of Britain remaining in the European Union, was attacked as she prepared to hold a meeting with constituents in Birstall near Leeds. West Yorkshire Police said a 52-year-old man was arrested by officers nearby and weapons including a firearm recovered. The motive for the attack was not immediately known. Prime Minister David Cameron said the killing of Cox, who was married with two children and had worked on US President Barack Obama's 2008 election campaign, was a tragedy.
The last British lawmaker to have been killed in an attack was Ian Gow, who died after a bomb planted by the Irish Republican Army exploded under his car at his home in southern England in 1990.
It was not immediately clear what the impact would be on the referendum. The pro-EU Remain campaign has fallen behind the Leave camp in pre-referendum polls.
More than $2.3 trillion has been wiped from global equities in the past week, as speculation the UK will leave the EU intensified amid anxiety over central bank policies. "The Brexit vote is directly ahead, and that's adding a lot of apprehension to the markets," said Bruce Bittles, chief investment strategist at Milwaukee-based Robert W Baird, which oversees $110 billion. "The Fed didn't help matters yesterday, leaving it fairly vague and not showing much command over what's happening in the economy. That uncertainty out of the Fed is bleeding into the stock market."
"Recent polls have shown Brexit is too close to call, or leaning in the direction of leaving," said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which manages $54 billion. "That campaign cooling a bit could provide relief to investors that think further campaigning will help drive votes in the direction of a Brexit. How sticky of a sentiment that is will be is yet to be determined."
The S&P 500 dropped 0.2 per cent at 12:52 pm in New York. The US benchmark is still down for a sixth day, the longest retreat since August. Sentiment has soured from just a week ago, when the measure climbed toward a record on optimism that a mix of low rates and moderate economic growth would continue to support higher stock prices. Data Thursday showed initial jobless claims rose last week more than forecast, while the cost of living in the US excluding food and fuel rose in May, propelled by rising rents.
The Stoxx Europe 600 Index dropped 0.7 per cent, trimming almost half its losses in the last hour of trading. The MSCI Emerging Markets Index slid 1.1 per cent to a three-week low. Japan's Topix lost 2.8 per cent as the yen surged.
The pound pared most of its decline versus the dollar to 0.1 per cent, after earlier falling as much as 1.3 per cent. The Bloomberg Dollar Spot Index added 0.1 per cent, after falling on Wednesday.
The rate on US 10-year Treasuries dropped one basis points to 1.56 per cent, after falling as much as six basis points to 1.52 per cent. The yield on 30-year debt also trimmed declines, after decreasing to the lowest level in 16 months.
Gold jumped to the highest level since August 2014. Bullion for immediate delivery advanced 0.9 per cent to $1,303.09 an ounce.
