(Updates prices, adds comments)
By Ian Chua
LONDON, Feb 28 (Reuters) - The dollar found some traction on
Thursday after falling to a record low against a basket of
currencies, but worries about the U.S. economy cast a shadow
over global stocks and looked set to keep Wall Street pressured.
Fears of a U.S. recession were supported by a recent flow of
negative U.S. economic data while comments from Federal Reserve
Chairman Ben Bernanke bolstered expectations for more U.S. rate
cuts to come.
Already fretting about the health of the U.S. economy,
European stock markets lost ground with shares such as Europe's
second biggest insurer AXA <AXAF.PA> further hit by
disappointing earnings results.
"European equities are vulnerable to a slowdown in the
(United) States spreading to Europe, exacerbated by the euro's
strength and on a currency-adjusted basis, they don't look
massively attractive," said Andrew Bell, strategist at Rensburg
Sheppards Investment Management.
The FTSEurofirst 300 <> index of top European shares
fell 0.9 percent, with Germany's DAX <> and London's FTSE
<> both also down about 0.9 percent.
Earlier, Japan's Nikkei <> lost 0.8 percent as
investors sold exporters like Toyota Motor Corp <7203.T> on
worries that a stronger yen would hurt profits, while MSCI's
measure of other Asian stock markets <.MIAPJ0000PUS> edged 0.2
percent lower.
MSCI's main world equity index <.MIWD00000PUS> slipped 0.4
percent.
U.S. stock futures <SPc1><DJc1><NDc1> were down between 0.2
percent and 0.4 percent, signalling a softer start for U.S.
stocks.
DOLLAR STEADIER, GOLD OFF HIGHS
The dollar index <.DXY>, which tracks the greenback's
performance against six major currencies, nudged up 0.1 percent
to 74.261, but remained not far off Wednesday's record low of
74.070.
The euro hovered near $1.51 after hitting an all-time high
of $1.5144 on Wednesday, while the dollar traded just below
106.50 yen <JPY=>, steadying after dipping below 106 yen in the
previous session to three-week lows.
"We've just had a big move driven by Bernanke who confirmed
market expectations of a rate cut of 50 basis points and
probably more to come," said Derek Halpenny, senior currency
economist at BTM-UFJ.
"Now markets are inevitably pausing and consolidating, but
any pause will be fairly brief as breaking through these levels
provides a catalyst to go further," he added.
Delivering the Fed's semi-annual report on the U.S. economy
to Congress on Wednesday, Bernanke said it was "important to
recognise that downside risks to growth remains", signalling a
readiness to lower rates to prevent further damage to the
economy. []
Bernanke will continue his testimony later on Thursday, this
time to the Senate Banking Committee.
Markets are giving a strong chance of a 50 basis point cut
to the 3.0 percent fed funds rate at the March policy meeting
and a small risk of a bigger 75 point cut. <FEDWATCH>
U.S. crude <CLc1> edged up 49 cents to $100.13, but remained
off the record high above $102 set on Wednesday, while gold
<XAU=> was at $959.20, down from the record high of $964.70 set
in the previous session.
Weakness in stocks gave government bonds a slightly bid tone
as investors sought the relatively safety of sovereign debt. The
March bund future <FGBLc1> climbed 21 ticks, while the benchmark
10-year yield <EU10YT=RR> slipped to 4.06 percent.
