By Jeremy Gaunt, European Investment Correspondent
LONDON, May 28 (Reuters) - Investors are in a skittish mood, bouncing between selling off risk at the first hint of trouble and snapping up bargains when things are calm.
Some are suggesting that the corrections of the past few weeks may be hitting bottom, but few, if any, forsee anything but volatility ahead.
With this in mind the meeting of G20 finance ministers in South Korea in the coming week is likely to be a key focus.
It brings with it everything from macroeconomic appraisals to talk of currency imbalances and even geopolitical tension from neighbouring North Korea.
The main question for investors, meanwhile, is whether the roughly 17.5 percent fall in MSCI's all-country world stock index between mid-April and last Tuesday was it for the correction. The index has rebounded around 6 percent since then.
Keith Springer, president of California-based wealth advisers Capital Financial Advisory Services, think it might be.
"The selling action (during the week) looks like a selling climax where people throw in the towel and run for the hills:, he told Reuters. "People were panicking."
There are other tell-tale signs that the sell-off, which has infected other assets such as emerging market debt, growth-linked commodities and high-yielding currencies, may be limited.
Reuters asset allocation polls, for example, showed large, long-term investors stepping away from equities, but at less of a rate that they have been.
There is also no sign of the wholesale dash to cash by investors that was seen when the subprime crisis threatened to overturn the global banking system.
Data from iMoneyNet showed a net $7.3 billion moved into U.S. money market funds in the week to May 25. But this followed a net $36.9 billion outflow the week before that.
In all, a net $27 billion has come out of the cash funds since around April 20, suggesting that despite stock market volatility there remains a strong appetite for yield.
PICKING UP BARGAINS
One of the things this cash may be being used for is to pick up bargains, which would be a logical move for investors who do not believe that the world is on the brink of another fundamental crisis.
Springer, for example, reckons the mood around financial markets provides an opportunity.
"Investor sentiment is overwhelmingly negative and getting worse, which is great for stocks," he said.
A similar view is held by Investec Asset Management, whose emerging market debt team believe that what is happening globally is positive economic and market trends being hit by not untypical volatility after last year's very strong bull market rally.
"We believe such a scenario provides good opportunities. Knee-jerk reactions from market participants to events or developments far removed from our investment universe have typically created value opportunities," the team said in a note.
"For example, we took advantage of recent bond movements as a result of European markets jitters to add to our long positions in South African and Polish rates."
In the background, both views assume that fundamentals remain positive -- improving U.S. and global growth, contained euro debt problems, attractive corporate earnings -- and that the sell-off is either not going to continue or will not get as bad as the one that followed subprime.
PARLEY IN BUSAN
Enter the G20. The finance ministers and central bankers will meet in the South Korea city of Busan on June 3 to 5, with the state of the global economy at the top of their agenda along with Europe's debt problems.
The main issue is a concern that the attempts by governments to put their finances in order will act as a brake on the slowly improving global economy.
But there will also be discussion about regulation of banks and financial markets following moves in the United States and Germany.
Both issues have been part of the market jitters of the past few weeks.
Currencies likely will come up on the sidelines as well, with some discussions about reserve currencies given the euro's recent fall and the dollar's domination.
Some Asian countries, including Japan and China, are concerned about the sharp rise of their currencies against the tumbling euro.
The week, as with the first week of every new month, will be capped on Friday by the monthly U.S. jobs report.
(Editing by Toby Chopra)