By Marc Jones
LONDON (Reuters) - A persistent sell-off in bond markets left financial market confidence in short supply on Thursday, with stocks lower globally and not even traditional safe havens like gold and the Swiss franc providing much of a refuge.
German 10-year Bund yields, the benchmark for European debt costs, rose to 2015 highs, dragging down the region's share markets sharply on fears the higher borrowing costs could hurt economic growth and profits.
Currency traders watched the euro burn past $1.13 to a five-month high as the dollar lost its overnight swagger.
That took the euro's surge over the last two days past 3 percent and with 10-year Bund yields testing 1 percent, market players had Wednesday's remarks from European Central Bank head Mario Draghi that volatility was here to stay ringing in their ears.
"Clearly these are very aggressive moves," said Patrick O'Donnell, an investment manager at Aberdeen Asset Management in London
"Momentum is clearly with the (bond market) bears at the moment and there was nothing said by ... Draghi yesterday that would stop this rout."
The global scale of the sell-off meant Wall Street was set for an early tumble, with futures pointing to the S&P 500, Dow Jones Industrial and the Nasdaq all starting roughly 0.4 percent in the red.
Marginally better-than-expected jobless claims data had helped narrow the expected opening declines slightly although that was balanced by a plunge in productivity figures.
After a 4 percent jump on Wednesday, Greek shares fell 2.75 percent as uncertainty clouded the country's hopes of clinching an aid deal with euro zone creditors in coming days.
Greek Prime Minister Alexis Tsipras left talks with senior EU officials in Brussels on Wednesday saying a deal was "within sight" and that Athens would make a payment due to the IMF on Friday.
But Eurogroup chairman Jeroen Dijsselbloem also said the differences between Greece and its lenders were "still quite large," while EU president Jean Claude Juncker said progress was still insufficient.
EMERGING STRAINS
With global risk appetite waning, emerging markets were back under pressure.
Indonesia's central bank said it was ready to intervene to support the rupiah after the currency dropped to a 17-year low against the dollar.
China's high-flying CSI300 and Shanghai Composite indexes staged impressive late recoveries to end 0.7 percent higher having been as much as 3.5 percent in the red at one point.
MSCI's broadest index of Asia-Pacific shares outside Japan ended almost 1 percent lower though as Australian shares fell 1.3 percent in a fourth straight day of losses, while Japan's Nikkei ended flat
Eastern Europe too was hit hard as threats of more EU sanctions on Russia as fighting flared again in Ukraine compounded worries about turbulent euro zone bond markets in Poland, the Czech Republic and Hungary.
U.S. Treasury yields rose in tandem with their European counterparts and the dollar's fresh slip against the euro left it struggling against other majors like the yen, sterling and the Swiss franc.
In commodities, crude oil steadied after sliding overnight on concerns generated by a big build-up in distillates and with OPEC expected to reject output cuts at its meeting on Friday.
Brent crude recovered to $63.90 a barrel after plunging 2.6 percent the previous day, while traditional safe-haven gold sagged to $1,183 an ounce.
"A lot of (gold's weakness) is pricing in expectations for a fairly positive non-farm payrolls reading tomorrow," said Mitsubishi analyst Jonathan Butler. "All things being equal, it should have been another pretty solid month of (jobs) gains."
(Reporting by Marc Jones; editing by John Stonestreet)
