World stocks lose grip on gains, euro scales heights

Wednesday, 11 December 2013 00:00 - - {{hitsCtrl.values.hits}}

Reuters: The euro reached a five-year peak against the yen and a six-week high against the dollar on Tuesday, as focus intensified on the dwindling level of spare cash in the euro zone’s banking system and the ECB’s apparent lack of concern. Stocks consolidated some of their gains of the last two days as caution also ticked-up before the Federal Reserve’s meeting next week amid talk of a tentative scaling-back of its stimulus from some of its policymakers.

After a subdued day for Asian stock markets, Germany’s DAX and France’s CAC 40 and Britain’s FTSE 100 all opened little changed to get the pan-regional FTSEurofirst 300 index off to a steady start. Investors were poised for a busy day of data on some of the countries still struggling in the euro zone, as well as some interesting money market operations at the ECB where liquidity levels are now the tightest in two years. Slightly weaker-than-expected French industrial production got things off to a shaky start though equivalent data from Italy was better ahead of its final third quarter GDP number later at 1000 GMT. France’s disappointing figures did little to rattle the strong euro, or the region’s main bond markets as they continued to add to the minor gains of recent days. The euro, at $1.3737, was at its highest level since late October versus the dollar and a five-year high of 142.19 yen as anticipation of further moves from Tokyo to boost growth kept the Japanese currency on the back foot. Benchmark U.S. Treasury yields were steady at 2.8243 in early European trade and Wall Street was expected to inch higher when it resumes later after the S&P 500 drifted to another record high on Monday. In Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.1%, though the session’s moves were small as trading was cautious before next week’s U.S. Federal Reserve meeting. The Nikkei stock average gave up 0.3%, pulling back from a one-week high as investors booked gains before the year-end, though Japan’s benchmark was still on track for its best yearly performance since 1972. On the commodities front, Brent oil was back up to $110 a barrel though U.S. crude edged up to $97.79 per barrel on expectations of a second weekly drop in U.S. crude inventories. Spot gold hovered to $1,240 an ounce, after gaining over the last two sessions on short-covering, technical selling and some fund-buying. Copper was steady at $7,137.25 a ton, near a one-month high as steady consumer buying from China put a floor under prices.