GLOBAL MARKETS-Dollar at record lows as ECB on hold

                                
  (Updates throughout, adds Wall Street outlook)
                                
 By Jeremy Gaunt, European Investment Correspondent
                                
 LONDON, March 6 (Reuters) - The dollar sank to a new record
low against the euro beyond $1.53 on Thursday, helping drive
gold to an all-time high and rattling equity investors worried
about the competitiveness of European companies.
                                
 Wall Street looked set for a weak start but Japanese shares
earlier gained nearly 2 percent.
                                
 The European Central Bank, as expected kept interest rates
steady at 4.0 percent. Higher rates in Europe over the United
States, which is easing monetary policy, are a main driver of
euro strength.
                                
 "There are pretty clear expectations for a widening in
interest rate differentials, keeping the dollar at a
disadvantage," said Tomoko Fujii, head of economics and strategy
for Japan at Bank of America in Tokyo.
                                
 The euro <EUR=> rose as high as $1.53459, a new record,
before dropping back slightly to $1.5317. The dollar also fell
to a record low of 73.101 against a basket of six major
currencies <.DXY>, although it later recovered a bit.
                                
 It was down 0.6 percent at 103.46 yen <JPY=>.
                                
 Besides responding to interest rate differentials
[INT/RATE], investors are dumping the dollar as a raft of U.S.
data comes in pointing to economic contraction.
                                
 The Institute for Supply Management's non-manufacturing
index for February beat expectations on Wednesday, but still
showed the service sector shrank for a second straight month
[ID:nN05597489].
                                
 ADP Employer Services also said on Wednesday that the U.S.
private sector cut 23,000 jobs in February, stirring worries
that U.S. jobs data due on Friday could come in weak.
                                
 The shrinking dollar, in the meantime, is helping boost gold
by making it cheaper for non-U.S. investors.
                                
 Spot gold <XAU=> hit $991.90, the highest it has even been
on a non-inflation adjusted level and within reach of the key
psychological level of $1,000 an ounce. It later traded slightly
lower at $985 an ounce.

                                
 COMPETITIVENESS
                                
 With the soaring euro threatening the competitiveness of
European exporters, European stocks came under pressure again,
also battered by financials falling on disappointing results
from Dutch firm Aegon <AEGN.AS>.
                                
 The FTSEurofirst 300 index <.FTEU3> of top European shares
was down 0.5 percent after rallying 1.7 percent a day earlier.
                                
 Earlier, Japan's Nikkei average rose 1.9 percent on
Thursday, partly because the yen was stabilising and Japanese
exporters thus gaining.
                                
 The benchmark Nikkei average <.N225> ended at 13,215.42, one
day after logging its lowest close since Jan. 23. The broader
TOPIX index <.TOPX> added 1.9 percent to 1,287.55.
                                
 Euro zone government bond yields were lower.
                                
 Two-year yields <EU2YT=RR> were off 1 basis point at 3.212
percent, while 10-year yields <EU10YT=RR> were off 4 basis
points at 3.816 percent.
                                
 Oil remained stubbornly above $100 a barrel, gaining 35
cents to $104.85.