* Dollar up for third day, helped by strong dollar pledge
* World stocks, crude prices dip
By Dominic Lau
LONDON, Oct 19 (Reuters) - The dollar rose for a third
straight day on Tuesday as traders took profits on gains in
other currencies after U.S. Treasury Secretary Timothy Geithner
spoke in favour of a strong dollar, while world stocks dipped.
The rebounding greenback helped keep a check on commodity
prices, with gold <XAU=> holding steady and oil <CLc1> slightly
softer, though copper prices <MCU3> hit their highest level
since July 2008 on falling inventories and strong demand
prospects.
Commodity prices and emerging market assets have been buoyed
by expectations of another round of money-printing by the U.S.
Federal Reserve to stimulate a flagging recovery as investors
searched for higher yields, while the dollar has come under
pressure against other currencies.
"Having priced in quantitative easing, markets are wondering
about whether they have over-anticipated the extent of it," said
Bernard McAlinde, investment strategist at NCB Stockbrokers in
Dublin.
"If the only thing that is tempering the market's
expectation of the amount of quantitative easing is better than
expected economic data then that's still good news."
Currencies like the euro and the Australian dollar that had
broken higher ground against the greenback are now giving up
some of those gains.
The dollar <.DXY> rose 0.6 percent against a basket of major
currencies after hitting a 10-month trough on Friday. The euro
<EUR=> dipped 0.2 percent to $1.3911.
Geithner's remark that the United States would not engage in
dollar devaluation and needed to work hard to preserve
confidence in a strong dollar also offered support.
[]
"Comments from Geithner and a reversal in short dollar
positions is pushing it higher," said Gareth Barry, currency
strategist at UBS in Singapore. "But this will not last too long
with many waiting to see what the Fed will do next month."
The market is looking for further clues on the size of the
quantitative easing, and will scrutinise any comments from Fed
Chairman Ben Bernanke and other U.S. central bank officials
later in the day.
MORE U.S. BANK RESULTS
Futures on the tech-heavy U.S. Nasdaq Composite <NDc1> lost
1 percent, indicating a weaker opening, after Apple <AAPL.O>
reported weaker-than-expected gross margins and iPad shipments
disappointed investors.
Futures for the S&P 500 <SPc1> and the Dow Jones <DJc1> fell
0.1 and 0.3 percent, respectively, ahead of results from Goldman
Sachs <GS.N> and Bank of America <BAC.N>. Citigroup <C.N> and
JPMorgan <JPM.N> have so far posted better-than-expected
quarterly results for the U.S. banking sector.
Japan's Nikkei <> put on 0.4 percent, while Europe's
FTSEurofirst 300 <> rose 0.1 percent, helped by a healthy
outlook for consumer spending in Germany. []
Yields on benchmark 10-year German Bunds <DE10YT=RR> rose 3
basis points to 2.42 percent on the back of the above-forecast
German ZEW sentiment survey.
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> fell 0.2 percent and the Thomson Reuters global
equity index <.TRXFLDGLPU> dropped 0.9 percent, while the MSCI
emerging market benchmark <.MSCIEF> slipped 0.3 percent.
Emerging market shares have gained more than 12 percent this
year, outpacing a 6-percent rise in global equities.
Credit Suisse private bank said in a note that emerging
market equities should be supported by further quantitative
easing in the United States.
The World Bank, however, warned that rising capital flows to
East Asia are fanning fears of asset bubbles and authorities
need to be careful not to repeat the mistakes of the Asian
financial crisis more than a decade ago. []
(Additional reporting by Anirban Nag, Harpreet Bhal and
William James in London; Editing by John Stonestreet)
