Daily Briefing: Bridge politics - bark worse than bite

LONDON (Reuters) - Authorities in Italy say anything between 10 and 20 people are still missing after Tuesday's bridge collapse in Genoa, as rescuers continue recovery efforts.

The collapsed Morandi Bridge is seen in the port city of Genoa, Italy August 16, 2018. REUTERS/Stefano Rellandini

A state funeral for victims will take place in Genoa on Saturday.

In the meantime the anti-establishment government is stepping back from its initial threats to mete out harsh punishment to the toll operator Autostrade - even as far as nationalising the concession.

It seems the reality has sunk in about how much that would cost the state and unnerve future investors in Italian infrastructure projects.

It may just settle for a straight fine instead, two government sources said.

This disconnect between bark and bite is a hallmark of populist administrations in Europe and the US; it is not clear that voters care that much.

MARKETS AT 0710 GMT

A calm of sorts after a tumultuous week on world markets.

Global equities steadied on Friday after another overnight rally on Wall St. The 0.7 percent gain in the S&P500 was led by a 10 percent surge in the world’s biggest retailer Wal Mart after it reported its biggest U.S. sales rise in a decade.

The move was helped by some rare optimism on world trade as Washington and Beijing scheduled some fresh talks on resolving the deepening trade rift between the world’s two biggest economies for late next week.

A 100 Turkish lira banknote is seen on top of 50 Turkish lira banknotes in this picture illustration in Istanbul, Turkey August 14, 2018. REUTERS/Murad Sezer/Illustration

With the dollar also easing back from its highs earlier in the week, the calmer picture aided emerging markets at large and after six consecutive losses and more than 20 percent losses since January, MSCI’s benchmark emerging markets index gained 0.2 percent early on Friday.

Turkey’s ailing lira also managed to find a foothold below 6 per dollar for the second day after new finance minister Albayrak’s call with international investors on Thursday on resolving the financial crisis was given the benefit of the doubt for now despite the threat of new trade sanctions by U.S. Treasury Secretary Mnuchin.

Although the lira has recovered some 10 percent of its value compared with the end of last week, it remains down 15 percent for the first two weeks of August and 34 percent for the year to date.

How those cumulative currency losses play out in foreign currency debt refinancing, interest payments and loan rollovers for the country’s banks and companies remains to be seen and the crunch period there is between September and October.

What it means for inflation in the absence of higher central bank interest rates is also of huge concern.

Credit rating firm S&P Global is due to review Turkey’s sovereign rating later on Friday.

Elsewhere, the dollar’s breather allowed some modest recovery of the euro and sterling as well as marginal gains for big emerging market currencies such as the rand and rouble.

Crude oil prices were firmer above $71 and 10-year U.S. Treasury yields were steady just below 2.87 percent.

European and U.S. stock futures were steady to a touch lower.

A thin day for European company news will keep eyes on financial fallout from the Genoa bridge disaster, which hit the stock of the roads operator Autostrade’s parent company Atlantia by more than 20 percent on Thursday and saw the Milan bourse underperform with a drop almost 2 percent.

A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own.

Editing by Andrew Heavens

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