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Paris attack impact on markets won't last

London - European stocks reverse losses; China bucks trend as Asian shares fall.

European shares reversed early losses on Monday and the safe-haven yen fell against the dollar with no long-term economic impact seen from Friday's attack in Paris.
Asian shares hit six-week lows as investors bought into traditionally safe investments, including gold, the yen and low-risk government debt. However, gold came off session highs, falls in bond yield moderated and the yen lost ground against the dollar.
"I don't want to say that we have got used to these things, but the markets have learnt to realise that the attacks tend to have very limited impact upon the economy and markets," Commerzbank economist Peter Dixon said.
US stock index futures turned positive, indicating Wall Street was likely to open slightly higher.
The pan-European FTSEurofirst 300 index opened lower, dragged down by travel and leisure stocks, though miners and energy stocks gained. The index was last up 0.38 per cent. Paris's CAC 40 index rose 0.3 per cent.
MSCI's broadest index of Asia-Pacific shares outside Japan fell nearly 1.5 per cent, its biggest daily fall since September 29, and was last down 1.2 per cent.
Leading the losers was Japan's Nikkei stock index, which tumbled nearly 1.1 per cent, nearly wiping out last week's gains as data showed the economy slipped back into recession in the July to September quarter. It contracted at a 0.8 per cent annualised rate. Economists polled by Reuters had forecast a 0.2 per cent contraction.
Emerging-market stocks lost nearly one per cent.
The widely-tracked CBOE volatility index or "fear gauge" hit its highest level since October 2.
Chinese stocks bucked the trend, however, reversing early losses to end higher. The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 0.5 per cent while the Shanghai Composite Index gained 0.7 per cent.
Yields on safe-haven two-year German bonds hit a new record low of -0.382 per cent and was last at -0.37 per cent, flat on the day.
Ten-year German yields, the benchmark for euro zone borrowing costs, fell 0.2 basis points to 0.56 per cent, moderating earlier falls after the EU statistics agency revised October inflation to 0.1 per cent year-on-year from an estimated zero.
US Treasury yields also fell. Ten-year yields were last down 1.6 bps at 2.26 per cent, having hit 2.241 per cent in Asian trade.
In currency markets, the euro initially hit a 6-1/2-month low against the safe-haven yen before recovering to trade flat at ¥131.886.
The single currency was last down 0.4 per cent at $1.0726, having hit $1.0674 last week on expectations the European Central Bank will step up quantitative easing.
"Ultimately, the Fed/ECB divergence will be the focus, with markets already pricing in a 10-basis-point deposit rate cut by the ECB and extension of the QE programme," Credit Agricole FX strategist Manuel Oliveri said.
The dollar rose 0.1 per cent against a basket of major currencies and 0.4 per cent against Japan's yen.
Markets in the Middle East, which trade on Sunday, were hit hard, though part of that decline was due to last week's drop in oil prices. Saudi Arabia's stock index hit a 35-month low on Sunday while stocks in Dubai and Egypt hit their lowest this year. - Reuters