* Safety rush turns to relief rally as Mideast tension eases
* Nikkei adds 2%, Australia hits record close, Europe up
* Yen slides to two-week low
* First two-day fall for gold since November
* Support for oil hints at caution remaining
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Jan 9 (Reuters) - World markets looked to have
overcome their new year wobbles on Thursday, as the United
States and Iran backed away from conflict in the Middle East.
Asia's best day in weeks and a strong European open pushed
the main global stocks index .MIWD00000PUS .EU back towards
a record high. Traders also moved out of their shelters in the
Japanese yen, gold and government bonds. /GOL GVD/EUR
Iran fired missiles at military bases housing U.S. troops in
Iraq on Wednesday in retaliation for a U.S. drone strike that
killed a top Iranian general. But in an address on Wednesday,
U.S. President Donald Trump said no Americans were hurt and made
no direct threats of a military response.
"Iran appears to be standing down, which is a good thing for
all parties concerned and a very good thing for the world,"
Trump said. He announced economic sanctions on Iran without
giving details.
Iranian Foreign Minister Mohammad Javad Zarif had earlier
said the strikes "concluded" Tehran's response to the killing of
its general, Qassem Soleimani.
"The obvious first conclusion to make is that we see the
potential for further yen depreciation going forward," said
MUFG's EMEA head of research, Derek Halpenny, adding that $1.10
could be possible and that the euro might lose ground, too.
The yen, considered a safe haven during geopolitical turmoil
because of its deep liquidity and Japan's current account
surplus, continued to reverse its 2020 gains in European
trading. It was last down 0.2% at 109.36, its lowest in a week
and a half JPY= .
Another safe currency, the Swiss franc, also fell against
both the dollar and the euro. EURCHF= /FRX .
In Asia, stock markets took their cue from Wall Street's
intraday recovery. MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS rose 1.3%, its biggest gain in
almost a month.
Hong Kong's Hang Seng .HSI and Shanghai blue chips
.CSI300 each added more than 1.2%. Japanese stocks .N225
gained 2.3% to their highest for the year.
Australian stocks .AXJO rose 0.8% to a record closing
high. Futures markets pointed to gains continuing in the United
States, with S&P 500 futures ESc1 up 0.3% and Dow futures 0.4%
higher FDXc1 .
"I think today is a bit of a relief rally," said Shane
Oliver, Chief Economist at AMP Capital in Sydney. "Yesterday,
investors were fearing the worst, that this was the escalation
now underway.
"The news overnight has been more along the lines that Iran
pulled its punches and Trump is toning things down, which is
seen by investors as substantially reducing the risk of a war."
Oil is cheaper than it was before the killing of Soleimani.
O/R Brent futures LCOc1 steadied at $65.41 per barrel, about
where they began the year.
Gold XAU= fell to $1,544.80 per ounce, giving back
Wednesday's gains but remaining more expensive than it was
before Soleimani's death, suggesting investors' fears have not
evaporated. GOL/
ALL IS WELL
U.S. Treasuries, which had soared in the flight to safety,
also settled back. Yields on the benchmark 10-year U.S. Treasury
note US10YT=RR were at 1.8685%, after dropping as low as
1.705%.
European bond yields were also at one-week highs, with the
benchmark German Bund yield almost 4 basis points higher on the
day at -0.22% DE10YT=RR , albeit still below last week's
seven-month highs. GVD/EUR
Risk appetite was also evident in emerging-market currency
markets. China's trade-exposed yuan CNY= reached a five-month
high of 6.9281 per dollar and hard-hit currencies like South
Africa's rand ZAR= and Turkey's lira TRY= also gained.
"All is well - so says Trump! That is the mood today," said
Bank of Singapore currency strategist Moh Siong Sim.
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