* Dollar slips after GDP report, before Fed meeting
* Oil falls below $82 on earlier dollar strength
* Bonds rise as GDP report hints of weakness ahead
(Adds opening of U.S. markets, changes byline, dateline from
LONDON)
By Herbert Lash
NEW YORK, Oct 29 (Reuters) - The dollar slipped and bond
prices rose on Friday after data showed the U.S. economy grew
as expected in the third quarter but not enough to alter
expectations the Federal Reserve will embark on further
stimulus next week.
U.S. Treasuries and bund futures rose after the
government's estimate of gross domestic product was in line
with analysts' forecasts of a 2.0 percent rise, but a
bigger-than-expected jump in business inventories pointed to
underlying weakness in the economy. For details see:
[]
Still, the GDP report took a backseat to expectations Fed
policymakers at their two-day meeting ending on Wednesday will
announce new bond purchases of at least $100 billion a month to
push borrowing costs lower and energize a sluggish recovery.
Forecasts for fourth-quarter and first-quarter GDP growth
will be cut by up to half a percentage point because of the
build-up in inventories, said Cary Leahey, an economist at
Decision Economics in New York.
"Bond prices jumped because the huge increase in
inventories will have to be worked off in the fourth quarter of
2010 and the first quarter of 2011," Leahey said.
ANEMIC U.S. GROWTH
Hugh Johnson, chief investment officer at Hugh Johnson
Advisors LLC in Albany, New York said the report will play a
role in the Fed's deliberations on Tuesday and Wednesday.
"The economy is recovering but recovering at an anemic
pace, and this certainly will help the Fed in its deliberations
on Tuesday," Johnson said.
The dollar reversed gains to trade slightly lower against
major currencies in a sign of investors' nervousness about the
size of monetary easing by the Fed.
The U.S. Dollar Index <.DXY> fell 0.11 percent at 77.223.
European and U.S. stocks were little changed after trading
lower, while crude oil slide $82 a barrel.
MSCI's all-country world equity index <.MIWD00000PUS> rose
0.17 percent, and the FTSEurofirst 300 <> index of top
European shares was up 0.2 percent at 1,088.18 points.
On Wall Street, the Dow Jones industrial average <> was
up 0.18 point at 11,114.13. The Standard & Poor's 500 Index
<.SPX> was down 0.18 point, or 0.02 percent, at 1,183.60. The
Nasdaq Composite Index <> was up 4.96 points, or 0.20
percent, at 2,512.33.
Gold swung higher to move briefly back above $1,350 an
ounce as the dollar lost gains.[].
Spot gold prices <XAU=> rose $4.60 to $1,347.90 an ounce.
Oil prices slipped. U.S. crude for December <CLc1> fell 58
cents to $81.60, after edging up slightly the previous day. In
London, ICE Brent <LCOc1> fell 38 cents to $83.21 a barrel.
In bond trading, the benchmark 10-year U.S. Treasury note
<US10YT=RR> was up 11/32 in price to yield 2.63 percent.
Bund futures <FGBLc1> were up 45 ticks at 129.24, versus
128.95 before the release of the U.S. data. []
The euro <EUR=> was down 0.08 percent at $1.392, and
against the Japanese yen, the dollar <JPY=> hit a fresh 15-year
low at 80.52 yen on trading platform EBS.
Japan's Nikkei share average <> fell 1.8 percent to a
one-month low on signs of sluggish consumer electronics demand
while the MSCI index of Asia Pacific stocks outside Japan
slipped 0.4 percent <.MIAPJ0000PUS>.
(Reporting by Leah Schnurr, Nick Olivari, Ellen Freilich in
New York; Lucia Mutikani in Washington; Emma Farge, Isabel
Coles and Jan Harvey in London; Blaise Robinson in Paris;
Writing by Herbert Lash; Editing by Kenneth Barry)
