TOKYO (Reuters) – Asian equities rebounded after a two-month low on Thursday, and the euro rebounded as the political turmoil in Italy shook global financial markets to their lowest level in 10 months.
Spreadbetter expects European equities to open slightly higher with British FTSE. FTSE rose 0.05%, DAX .GDAXI 0.1%, and France's CAC .FCHI 0.05%.
Hong Kong's Hang Seng .HSI rose 0.75 percent and the Shanghai Composite Index .SSEC gained 1.4 percent after it was revealed that growth in China's huge manufacturing sector is accelerating sharply and forecasts in May surpassed an eight-month high.
MSCI's broadest index of Asia-Pacific equities outside Japan. The M1APJ0000PUS gained 0.6 percent after plunging to its weakest level since early April on Wednesday.
South Korea's KOSPI .KS11 added 0.5 percent and Japan's Nikkei .N225 added 0.8 percent.
The Dow .DJI rose 1.25 percent overnight and the S & P 500 .SPX gained 1.27 percent.
Global stocks have been hit hard, safe-haven government prices have risen sharply, and the euro fell during the week after Italy's two anti-establishment parties scrapped plans to form a coalition.
This sparked the prospect of new parliamentary elections and raised fears that such a vote would be a referendum on Italy's membership of the euro.
However, with the two anti-establishment parties that once again advocated the formation of a coalition government, a measure of calm returned, instead of forcing Italy to hold elections for the second time.
"Experience shows that these" crises "normalize over the long term after the initial adjustment of market expectations," wrote Carl Weinberg, chief economist at High Frequency Economics, in a note to customers.
Successful auctioning of five- and ten-year government bonds also raised concerns about Italy's ability to finance itself after the turmoil on its debt market triggered the biggest one-day rise in two-year bond yields in 26 years. Bond yields rise with falling prices.
"Financial markets have been able to assess and digest the situation in Italy in recent days, and it is now time for a small respite," said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management in Tokyo.
"The postponement will allow markets to focus on fundamentals, such as Friday's US labor market report."
The Euro stood at 1.1664 EUR = after a rally of 1 percent the previous day. The currency fell to $ 1.1510 on Tuesday, its lowest level since the end of July 2017.
The dollar index against a basket of six major currencies .DXY lost 0.1 percent to 94.055 after rising to almost seven months on Tuesday had risen from 95.025.
The US currency was JPY = 108,780 yen, after a low of 108,115 on Tuesday, as risk aversion in broader markets increased investor demand for yen, which is often sought in times of market turmoil.
The dollar received support as signs of easing the political crisis in Italy increased US Treasury yields from multi-week lows.  10-year US Treasury yield US10YT = RR was 2.849 percent, down 2.799 percent on Tuesday, its lowest level since 11 April.
The price of crude oil rebounded overnight after a rally.
U.S. Crude futures CLc1 fell 0.18 percent to $ 68.09 a barrel from a 2.2 percent gain on Wednesday as the Russian Central Bank expressed caution in plans to increase oil supply. Prices plummeted on Tuesday at a six-week low of $ 65.80 a barrel amid fears that Saudi Arabia and Russia could increase their issuance.
Brent crude LCOc1 lost 0.35 percent to $ 77.23 a barrel, after losing 2.8 percent on Wednesday.
Reporting by Shinichi Saoshiro; Arrangement of Shri Navaratnam and Eric Meijer