*
European stock indexes slip, Wall Street futures mixed
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First Republic Bank gets $30 bln injection, worries linger
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Fed data showed banks sought record emergency liquidity
(Updates prices throughout, recasts pars 1-3, adds ECB
supervisors' meeting)
By Elizabeth Howcroft
LONDON, March 17 (Reuters) - European stock indexes
edged lower on Friday after an early recovery ran out of steam,
while Wall Street futures were mixed as investor sentiment
remained fragile after a week of turbulence.
In a crisis that began with the collapse of U.S.-based
Silicon Valley Bank last Friday, risk appetite plunged earlier
in the week as investors lost confidence in regional banks in
the United States and Credit Suisse in Europe. The tumultuous
week saw bond yields drop as investors lowered their
expectations for future rate rises.
Risk appetite showed signs of recovery on Thursday, helped
by Credit Suisse saying it would borrow up to 50 billion Swiss
francs ($54 billion) from the Swiss National Bank and, later in
the day, a group of major banks injecting $30 billion in
deposits into First Republic Bank, a mid-sized U.S. lender.
Still, analysts say the worry about a possible banking
crisis is far from over.
Credit Suisse's chief executive said on Friday the bank was
working hard to stem customers outflows, although this could
take time. Credit Suisse shares resumed their decline.
European Central Bank supervisors do not see contagion for
euro zone banks from the market turmoil, a source familiar with
the content of an ad hoc supervisory board meeting earlier this
week told Reuters.
At 1207 GMT, the MSCI world equity index, which tracks
shares in 47 countries, was up 0.3% on the day.
Europe's STOXX 600 was down 0.1% and set to lose 1.9% on the
week overall .
London's FTSE 100 was little changed . Wall Street
futures were mixed.
The U.S. 2-year Treasury yield, which is the most sensitive
to shifts in interest rate expectations, was up 1 basis point on
the day at 4.1426% - still closer to Wednesday's
six-month low of 3.72% than the peak of 5.084% it hit the
previous week, which had been its highest since 2007.
The European Central Bank raised rates by 50 bps on
Thursday, sticking to its pledge to fight inflation even as some
investors called for a pause in the rate-hiking cycle until the
banking turmoil eases.
The benchmark German 10-year yield was down 5 bps at 2.193% .
Markets are pricing in a 25 bps increase by the U.S. Federal
Reserve when it meets next week, down from previous expectations
for a 50 bps increase.
Fed data on Thursday showed that banks sought record amounts
of emergency liquidity in recent days, which in turn helped undo
months of central bank effort to shrink the size of its balance
sheet.
"The fact that the Fed has been very proactive in terms of
opening the liquidity tap is potentially useful and that’s
stabilised things in the short term at least," said Guillaume
Paillat, multi-asset portfolio manager at Aviva Investors.
"It’s potentially a more stable environment, because it
feels like we’ve passed the crisis point and things should
normalise a bit."
Against a basket of currencies, the U.S. dollar was down
0.2% . The Australian dollar, seen as a liquid proxy for
risk appetite, was up 0.6% on the day at $0.6695 .
The British pound and the euro were both up 0.2% .
Oil prices benefited from the initial resurgence of risk
appetite, before paring gains, with Brent crude futures up 0.4% and U.S. West Texas Intermediate crude up 0.7% after having hit their lowest in more than a year earlier in the
week.
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(Reporting by Elizabeth Howcroft; editing by Robert Birsel and
Christina Fincher)
