* Dollar rises after Bernanke sees tighter policies
* Crude and metal prices ease in response
* Emerging market shares break higher ground
By Dominic Lau
LONDON, Oct 9 (Reuters) - The dollar rose on Friday after
Federal Reserve Chairman Ben Bernanke indicated U.S. monetary
policy could be tightened as a recovery takes hold, sending
crude and metal prices lower.
World stocks <.MIWD00000PUS> were steady as retreating
commodity prices hurt heavyweight miners, offsetting gains in
Asia <.MIASJ0000PUS> and emerging markets.
Shares in emerging markets <.MSCIEF> advanced 0.4 percent,
hitting a more than 13-month high for the fourth straight day,
after better-than-expected U.S. corporate earnings and economic
data soothed fears about the strength of the economic recovery.
In Europe, the FTSEurofirst 300 <> index was up 0.3
percent.
Bernanke said on Thursday that the Fed must continue to prop
up the economy for an extended period but can't do so
indefinitely for fear of triggering an inflationary surge.
[]
His comments lifted the dollar <.DXY> off 14-month lows
against a basket of currencies. The greenback was up 1.1 percent
at 89.29 yen, while the euro <EUR=> fell 0.5 percent to $1.4723.
"Explanations by Fed officials have been helpful in clearing
the air on what strategy will be taken as the economy recovers,"
said Ulrich Leuchtmann, currency strategist at Commerzbank in
Frankfurt.
But Leuchtmann said that dollar gains on Bernanke's comments
would be limited, as Fed was unlikely to raise rates until the
second half of 2010.
"The market is not yet ready to jump on the rate rise
outlook to aggressively buy the dollar," he said.
Gold prices <XAU=> pulled back to below $1,050 an ounce,
snapping a rally that took prices of the precious metal to
all-time highs for three days in a row, while oil <CLc1> fell to
$71 a barrel.
Governments and central banks around the globe have injected
trillions of dollars in the past year or so to pull the world
out of a most severe recession since the 1930s Great Depression.
The flood of liquidity has helped boost all investment asset
classes from equities to government bonds.
"The longer that the rally lasts -- and the higher that
equity prices go -- the greater the likelihood that, in this new
world, policymakers will see their new job description as being
to take away the punch bowl before the party gets going, not
just in the usual sense of the word ... but before asset price
pick-ups can become booms," said Michael Dicks, head of research
and investment strategy at Barclays Wealth, in a report
"For this reason, we remain circumspect concerning the
longevity of any equities rally persisting through 2010."
In another sign that the economy is on the mend, Europe's
largest telecom Telefonica <TEF.MC> offered bigger-than-expected
dividends. The Spanish company said it would hike its dividend
per share by nearly 22 percent to 1.40 euros ($2.07) per share,
far outstepping analyst expectations for 1.27 euros per share.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
up 5 basis points at 3.301 percent, while the 10-year German
bund yield <EU10YT=RR>, the euro zone's benchmark, was up 3
basis points at 3.171 percent.
(Additional reporting by Naomi Tajitsu in London; Editing by
Toby Chopra)
