GLOBAL MARKETS-Markets on edge as policymakers flex muscles

LONDON, Sept 2 (Reuters) - Fresh government intervention to
support China's jittery markets and bets on a more dovish stance
from central bankers provided limited respite from a stock
market sell-off on Wednesday as oil resumed its fall.
European equities gave up early gains, with commodities
stocks the hardest hit, as U.S. crude fell more than $1
to $44.39 a barrel. Brent crude was down 89 cents to
$48.67.
There had been some early relief after Chinese stocks
managed to bounce from steep losses and end the day flat,
following fresh supportive measures from brokerages eased
investor fears of a trading crackdown from Beijing.
Benchmark indexes in Paris, Frankfurt and Milan were broadly
flat and outperforming a slightly negative European market at
"Trader and investor nerves are a bit fragile at the
moment...People are just unsure at the moment of whether this is
a good buying opportunity or not," said Paul Chesterton, a
trader at brokerage Peregrine & Black.
A recent surge in financial market volatility, driven by
fears over China's economic slowdown and its impact on world
growth, has seen the Chinese central bank pump cash into the
economy and also fuelled bets that the U.S. Federal Reserve will
delay raising interest rates as early as this month.
With the European Central Bank's policy meeting due on
Thursday, traders said there were growing expectations for a
dovish stance in the wake of the market turmoil. The ECB
launched its bond-buying scheme, or quantitative easing, this
year and it has pledged to intervene further if needed.
"Investors are keenly awaiting (ECB President Mario)
Draghi's press conference tomorrow and a lot of investors are
not taking major positions ahead of that," said RIA Capital
Markets strategist Nick Stamenkovic.
"The likelihood is that he is going to adopt a dovish
posture given the rising global headwinds and the market will
pay particular attention to the inflation forecasts for 2016 and
2017."
German 10-year yields DE10YT=TWEB , the benchmark for euro
zone borrowing costs, were 1 basis point lower at 0.79 percent.
Yields on other top-rated bonds were down by a similar amount.
The U.S. dollar rose and took the heat out of a rush to
unwind carry trades that boosted the safe-haven yen and the
low-yielding euro in recent weeks.
"There has been a moderation in risk aversion with European
stocks and Wall Street stock futures in the green. That has seen
the yen give up some of its recent gains," said Alvin Tan,
currency strategist at Societe Generale (PARIS:SOGN).
"U.S. payrolls will be the focus, but I doubt it will change
the current debate over whether the Federal Reserve will hike
rates in the near term or not."
Emerging market stocks fell for the third straight day, down
half a percent and approaching recent 6-year lows .MSCIEF
while the rouble extended the previous session's 3.8 percent
fall against the dollar which was the biggest one-day loss in
three months RUB= .
Asian shares fell for a third straight day on Wednesday as
weak manufacturing reports from China, the United States and
Europe fuelled worries about slowing global growth.