* Dollar trades near 85 yen on soft U.S. yields
* U.S. stock futures point to gains, but sentiment fragile
* Wary investors await U.S. industrial production, PPI data
By Anirban Nag
LONDON, Aug 17 (Reuters) - The dollar hovered near a 15-year
low against the yen on Tuesday, as prospects of more weak
economic data from the United States added to worries about a
global slowdown and checked gains in stock markets.
The influential German ZEW report showed analyst and
investor sentiment fell in August to its lowest level since
April 2009 on concerns that a faltering global economic recovery
would hit Europe's largest economy.
That dragged down the euro <EUR=> [], which had
earlier risen past $1.29 after both Irish and Spanish debt
auctions attracted robust demand. []
European shares pushed higher, although analysts said gains
could prove to be fleeting given fragile sentiment. U.S. stock
futures <SPv1> <DJv1> also pointed to a firm start.
"We wouldn't expect markets to make too much headway
dramatically in either direction," said Graham Secker, European
equity strategist at Morgan Stanley. "We're in a holding pattern
until we get a breakout in the economic data."
The dollar steadied at 85.30 yen, having slid as low as
85.11 <JPY=> earlier on Tuesday. It was not far from a 15-year
low of 84.72 yen struck last week as investors focused on
whether Japanese authorities would take fresh measures to curb
the yen's strength and boost a flagging domestic recovery.
Traders said it is only matter of time before the greenback
falls past 85.00 yen and threatens to test last week's milestone
due to a general bearishness towards the dollar.
Markets were awaiting U.S. producer price and housing starts
data for July, as well as the Federal Reserve's data on
industrial production, all due later on Tuesday.
Weaker-than-expected numbers could push the dollar and yields on
U.S. Treasuries lower still.
On Monday, data showed U.S. homebuilders' optimism hit a
near 1-1/2 year low in August and a regional manufacturing gauge
grew more slowly than expected. Those numbers came after Japan
reported growth slowing to a crawl in the second quarter,
bolstering safe-haven flows. []
GOLD HITS 2-MONTH HIGHS, METALS GAIN
Reflecting concerns that the U.S. recovery from its longest
and deepest recession since the 1930 is slowing, investors
consolidated positions in safe-haven assets like core government
bonds and gold and remained wary of adding to risky trades.
The Thomson Reuters global stock index <.TRXFLDGLPU> was
0.34 percent higher at 122.84 while the FTSEurofirst 300
<> index of top European shares was up 0.64 percent at
1,052.15 points. Miners led the gainers as metals prices rose on
the back of a weaker dollar.
Copper prices rose with many investors awaiting the release
of industrial production data from the United States for a steer
on demand prospects.
Three-month copper <CMCU3> on the London Metal Exchange was
at $7,343 a tonne, compared with $7,250 at Monday's close.
Aluminium <CMAL3> was also higher.
Gold touched its highest level in nearly two months, boosted
by the weaker dollar and expectations of further buying by
investors concerned about the stuttering pace of recovery. Spot
gold <XAU=> hit $1,277.60 -- its highest level since July 1 --
before slipping to $1.226.65 an ounce at 1123 GMT.
"People are worried about the pace of recovery, particularly
after some quite weak data out of the United States and Japan
recently," said Daniel Smith, an analyst at Standard Chartered
Bank. "At the moment it looks like the market is breaking down
that overhead resistance and we're likely to move to $1,250."
Crude bounced from one-month lows but concerns remained that
demand could take a beating following disappointing data from
the United States and Japan, the world's largest and
third-largest oil consumers.
U.S. crude for September delivery <CLc1> was up 1 percent at
$76.06 a barrel at 1125 GMT, while October ICE Brent <LCOc1>
gained $1.20 cents to $76.82 a barrel.
U.S. Treasury debt prices dipped, pushing yields up from
17-month lows as investors awaited economic data for more clues
on the health of the economy. [].
(Additional reporting by Brian Gorman and Michael Taylor in
London)
(Editing by Susan Fenton)
