(Adds quotes, updates prices)
By Veronica Brown
LONDON, March 20 (Reuters) - Investors called time on the
rush to commodities on Thursday with repatriated profits helping
lift an ailing dollar, while stock markets sagged as bank stress
dominated sentiment.
Flagship precious metal gold tumbled to a one-month low as
investors cashed in on a surge that had taken bullion to a
record high above the $1,000 milestone. But analysts said the
bull run could easily resume after the upcoming Easter break.
Spot metal <XAU=> fell as low as $904.65 per troy ounce from
$944.20/945.00 quoted late in New York on Wednesday, heading for
its biggest weekly loss in a quarter of a century, and down some
12 percent from Monday's record $1,030.80.
Similarly, oil <CLc1> and base metal price losses deepened
on fears that global consumption could contract if the United
States slipped into recession.
Crude was battling to stay above $100 a barrel after a hefty
sell-off in the previous session <CLc1>.
Analysts said hefty profits seen in commodities markets
already this year were proving too hard to resist in the current
uncertain global climate.
"Any trend, even the best one, is subject to profit-taking
and commodities had been performing very well," Commerzbank
commodities analyst Eugen Weinberg said.
The temptation to cash in on gold has been particularly
compelling, given a rise of almost 50 percent in prices since
August 2007 when the global crisis in credit markets erupted.
The drive out of commodities revived the fortunes of a
sickly dollar, helping lift the U.S. currency further from this
week's record lows versus the euro and a basket of major
currencies.
Analysts said it was too early to call an end to the dollar
rout, which has also seen it sink to record lows versus the
Swiss franc as well as 13-year troughs against the yen.
"The dollar is holding up remarkably well ... and I am
wondering if the steep fall in commodity prices is causing
stress among leveraged names and creating a short-term demand
for dollars," said Neal Kimberley, head of FX sales at BTM-UFJ
in London.
"Another scenario is that we are merely seeing Europe
reducing dollar shorts ahead of the Easter break. This is also
highly plausible and possibly short-lived," he said, adding that
longer-term investors might be tempted to use the dollar's
rebound to sell into again.
The euro was down 1.25 percent at $1.5435, well off Monday's
record high of $1.5904 but still almost 6 percent higher on the
year to date <EUR=>.
The dollar also gained around 1 percent to 99.67 yen <JPY=>
and rose back above parity versus the Swiss franc to 1.0138
francs <CHF=>.
DOWNBEAT STOCKS
Derailed basic resource prices drove mining and energy
shares lower, but the ongoing global crisis in credit markets
was the biggest underlying factor behind stock market jitters.
Credit Suisse shares <CSGN.VX> were down almost 10 percent
after the Swiss bank cautioned it was unlikely to be profitable
in the first quarter due to big debt writedowns.
Shares in German bank IKB <IKBG.DE> were also down 10
percent after it said it expects to announce further writedowns.
The European Central Bank and Bank of England pumped 15
billion euros and 5 billion pounds, respectively, into the
banking system on Thursday via short-term loans to help tide
banks over the holiday period. See []
The pan-European FTSEurofirst 300 index <> was down
0.3 percent at 1,222.27 points, trimming earlier losses, while
the MSCI's measure of Asian stocks outside Japan <.MIAPJ0000PUS>
was down 2.16 percent at 427.12.
"The market is still driven by uncertainty," said Britta
Paech, portfolio manager at M.M. Warburg. "We continue to battle
with the financial crisis and it'll stay that way for a while."
(Additional reporting by Eva Kuehnen in Frankfurt and Jamie
McGeever in London; Editing by Mike Peacock)
