* Irish economy growth concerns weigh on euro
* 2-year Treasuries yields hit record low on QE speculation
* Tighter Swiss bank capital rules pressure stocks
(Updates with European markets close)
By Walter Brandimarte
NEW YORK, Oct 4 (Reuters) - The U.S. dollar gained broadly
on Monday on lingering concerns growth could be weaker in
euro-zone economies, while speculation of further monetary
easing by the U.S. Federal Reserve boosted Treasuries prices.
U.S. and European stocks fell on fears that tighter banking
capital rules imposed by Swiss policy makers may cut the
profitability of the financial sector.
Worries about euro zone economies were again in the
spotlight, adding pressure to the euro, after the Irish central
bank said Ireland's economy will crawl to a virtual halt this
year, defying government hopes of a modest growth.
Investors were also cautious about the implementation of
additional austerity measures in Portugal.
"The euro has come a very long way in a very short period
of time, and certainly Ireland and the peripheral euro zone
country issues have not gone away," said Omer Esiner, chief
market analyst at Commonwealth Foreign Exchange Inc in
Washington. When those issues "come back in the spotlight, they
are used to take some profits on the euro."
The European single currency <EUR=> weakened 0.73 percent
against the dollar to $1.3688.
Euro-zone concerns also bolstered the dollar against other
major currencies. The U.S. Dollar index <.DXY> rose 0.45
percent despite expectations of additional monetary easing by
the Fed, which tends to be negative for the greenback.
Against the Japanese yen, the dollar <JPY=> was up 0.23
percent at 83.38.
Gold prices retreated slightly as the dollar rose. Spot
prices for the metal <XAU=> fell 0.22 percent to $1,314.40 an
ounce, close to Friday's all-time high of $1,320.80.
Gold prices have been soaring recently as investors see it
as a safe-haven alternative to a weakening dollar.
"Gold is holding up comparatively well considering the
rebound in the U.S. dollar," said David Thutell, an analyst at
Citigroup. "I suspect that for many months there will be enough
market participants who don't buy the recovery story and will
keep buying gold."
Speculation that the Fed will eventually resume
quantitative easing to support the economy, probably by
purchasing more government bonds, sent yields on two-year
Treasury notes <US2YT=RR> to a record low of 0.4 percent in
overnight trading.
The two-year notes were up 1/32 in price later, with the
yield at 0.4106 percent. Prices of 30-year bonds <US30YT=RR>
rose 3/32, sending their yield down to 3.7129 percent.
TIGHTER BANK RULES
Key stock indexes slid in the United States and Europe
following a decision by Swiss regulators to require global
banks UBS AG <UBS.N><UBSN.VX> and Credit Suisse <CS.N><CSGN.VX>
to hold far more capital than their international rivals.
The rules, aimed at preventing a banking crisis in
Switzerland, could crimp competitiveness in investment banking.
For details, see [].
"These austerity measures are necessary but don't have a
stimulating effect on the market," said Malcolm Polley,
president and chief investment officer of Stewart Capital
Advisors in Indiana, Pennsylvania. "It could mean that equity
returns will be muted, though not necessarily down, for quite a
while."
The MSCI All-Country Wold stock index <.MIWD00000PUS> fell
0.7 percent, while Europe's FTSEurofirst 300 index <>
fell 0.63 percent in its sixth straight session of losses.
The thee main U.S. stocks indexes posted losses of about 1
percent by midday.
The Dow Jones industrial average <> declined 112.62
points, or 1.04 percent, to 10,717.06, while the Standard &
Poor's 500 Index <.SPX> fell 13.76 points, or 1.20 percent, to
1,132.48. The Nasdaq Composite Index <> was down 36.74
points, or 1.55 percent, at 2,334.01.
Microsoft Corp shares <MSFT.O> weighed on the market,
falling more than 2 percent after Goldman Sachs downgraded the
stock to "neutral," citing competition from tablet computers.
[]
Key emerging market stock indexes remained in positive
territory, however, as investors continued to favor
fast-growing developing economies. The MSCI index for emerging
market shares <.MSCIEF> gained 0.29 percent.
Brazil's Bovespa index <> edged 0.04 percent higher
after the front-runner presidential candidate, Dilma Rousseff,
backed by President Luiz Inacio Lula da Silva, failed to secure
an outright victory in Sunday elections. She will now face
opposition candidate Jose Serra in an Oct. 31 runoff.
Oil prices were little changed after a rally of more than 6
percent last week. U.S. crude prices <CLc1> gained 0.15
percent, to $81.70 per barrel.
(Additional reporting by Chuck Mikolajczak, Chris Reese and
Nick Olivari in New York, Jan Harvey in London; Editing by
Padraic Cassidy)
