Euro, dollar gain after G20, stocks weaker

Reuters: The Euro and the Dollar gained against the Yen on Monday after the G20 decided not to criticize Japan for its expansionary policies, but Europe’s weak growth outlook and the approach of Italian elections capped the moves.

Financial leaders from the world’s 20 biggest economies promised in their final statement after a weekend meeting not to devalue their currencies to boost exports, in a bid to defuse talk of currency wars among major nations.

The Euro gained 0.15% to 125.20 Yen, edging up toward a 34-month high of 127.71 Yen hit earlier this month, while the Dollar rose 0.5% to 93.99 Yen, closer to its highest since May 2010 of 94.46 hit on 11 February.

“Future Yen direction will continue to be driven by domestic monetary policy from the Bank of Japan and improving international investor confidence, which are both driving the yen weaker,” Bank of Tokyo-Mitsubishi UFJ currency analyst Lee Hardman said.

With the G20 meeting over, the focus in European markets is switching to the release of Euro area Purchasing Managers’ Indexes for February and German sentiment indices due later in the week, and the upcoming general elections in Italy. Analysts expect the Euro area flash PMI indices, which point to economic activity around six months out, to show growth stabilizing rather than a clear end to the current recession across the region.

The FTSEurofirst 300 index of top European shares opened down 0.1% at 1,159.87 points, with Germany’s DAX, the UK’s FTSE and France’s CAC-40 flat to slightly weaker.

Earlier, the effect of the G20 statement and further announcements from Japan’s Prime Minister Shinzo Abe, indicating a renewed drive to stimulate the economy lifted the Nikkei stock index by 2.1%, near to its highest level since September 2008.

Meanwhile US stock futures were barely changed and are expected to stay little changed as Wall Street will be closed on Monday for the Presidents’ Day holiday.  In the commodity markets, copper fell 0.7% to US$ 8,150 a tonne as traders played catch up after a week-long holiday in China last week, with worries about the Euro zone economy weighing on sentiment.

US crude fell 34 cents to US$ 95.50 a barrel but Brent inched up six cents US$ 117.70.

Gold rebounded by 0.3% from a six-month low to be US$ 1,614 an ounce as jewellers in China returned to the physical market after the Lunar New Year holiday.