FRANKFURT, Germany (AP) — Market participants were transfixed Tuesday by a stunning slide in the Russian ruble that presented President Vladimir Putin with one of the biggest challenges of his 15-year rule.
The currency, under pressure from lower oil prices and Western sanctions over Moscow's conflict with Ukraine, fell an astonishing 20 percent before recovering somewhat by afternoon Moscow time to trade around 72 per dollar.
That's a modest improvement on day lows of 78.5 to the dollar. It still means the currency is more than 60 percent down from where it was in January.
Elsewhere, Asian stocks slid after Chinese manufacturing contracted this month but European markets were lackluster and Wall Street was poised to rebound.
KEEPING SCORE: European stocks were mixed. France's CAC 40 was down 0.9 percent to 3,968.55 and Germany's DAX lost 0.3 percent to 9,304.62. Britain's FTSE 100 gained 0.4 percent to 6,207.64. U.S. stocks pointed down after Monday's losses. Dow futures were 0.2 percent lower at 17,089 while S&P 500 futures fell 0.5 percent to 1,974.
RUSSIAN WOE: The Russian currency sagged despite a massive interest rate increase to 17 percent from 10.5 percent by the Russian Central Bank. The ruble has been sliding as a result of the collapse in oil prices and Western sanctions over Russia's actions in Ukraine.
The euro rose to $1.2525 while the dollar slipped 1.37 percent to 116.91 yen.
THE QUOTE: "No one expected the ruble to hit 60 this year against the dollar, let alone 70 or 80 even. And no one is positioned for this. This will impart huge short term damage to Russia — there is now a huge credibility gap for Russian policy makers in the eyes of the market," wrote Timothy Ash at Standard Bank PLC.
ENERGY: Oil prices are at five-year lows as supply booms while energy demand wanes. Benchmark U.S. crude was down $1.89 to $54.02 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, an international benchmark, fell $1.96 to $59.10 in London.
CHINA FACTORIES: Shanghai shares gained after a preliminary HSBC report on manufacturing showed a contraction for the first time in seven months. While the numbers underscored the persistent weakness in the world's second biggest economy, they also fuelled mainland Chinese investor hopes of more stimulus after a surprise interest rate cut last month. The report, however, was a negative for other Asian markets.
ASIAN SCORECARD: Japan's benchmark Nikkei 225 index tumbled 2 percent to close at 16,755.32 and South Korea's Kospi lost 0.9 percent to 1,904.13. Hong Kong's Hang Seng fell 1.6 percent to 22,670.50. In mainland China, the Shanghai Composite Index surged 2.3 percent to 3,021.52. Australia's S&P/ASX 200 shed 0.7 percent to 5,152.30.