* Dollar slips after GDP report, before Fed meeting
* Oil falls below $82 a barrel on economic concerns
* Bonds rise as GDP report hints of weakness ahead
(Updates with close of European markets)
By Herbert Lash
NEW YORK, Oct 29 (Reuters) - Bond prices rose and the
dollar eased on Friday after data showed the U.S. economy grew
last quarter but not briskly enough to alter expectations of
Federal Reserve monetary easing next week.
U.S. Treasuries and German bund futures gained 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 U.S. economy. For details see:
[]
Still, the GDP report took a backseat to expectations Fed
policymakers at their two-day meeting ending on next Wednesday
will announce new bond purchases of at least $100 billion a
month to push borrowing costs lower and energize a sluggish
recovery.
While the dollar index, a gauge of its performance against
six major currencies, was little changed, the yen hovered close
to the record peak in 1995 of 79.75 yen to the dollar.
Investors bet the Bank of Japan will not intervene to
weaken the yen before the Fed's announcement next week. The
dollar <JPY=> was down 0.62 percent at 80.50 against the yen
and the Dollar Index <.DXY> down 0.15 percent at 77.189.
"There's big news next week and most of it is built into
the market," said Richard Sichel, chief investment officer at
Philadelphia Trust Co.
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 U.S. 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.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
14/32 in price to yield 2.62 percent.
Bund futures <FGBLc1> settled up 44 ticks at 129.23.
ANEMIC U.S. GROWTH
Global stocks edged higher, with European shares posting a
second consecutive monthly gain but Wall Street trading was
flat after the GDP report met analysts' forecasts.
"This figure clearly shows a slowdown in growth without
pointing towards a double dip. Overall, it doesn't change the
expectation of more monetary easing from the Fed," BNP Paribas
economist Jean-Marc Lucas said.
Investors also are cautious before U.S. elections next
Tuesday. A Republican takeover of the House of Representatives
is seen as likely. []
The FTSEurofirst 300 <> index of top European shares
closed 0.1 percent higher at 1,086.61 points. MSCI's
all-country world index <.MIWD00000PUS> rose 0.1 percent.
On Wall Street, the Dow Jones industrial average <> was
up 4.73 points, or 0.04 percent, at 11,118.68. The Standard &
Poor's 500 Index <.SPX> was up 0.29 point, or 0.02 percent, at
1,184.07. The Nasdaq Composite Index <> was up 8.22
points, or 0.33 percent, at 2,515.59.
As the dollar lost gains spot gold prices <XAU=> rose
$14.92 to $1,358.20 an ounce. [].
Oil prices slipped. U.S. crude for December <CLc1> fell 87
cents to $81.31, after edging up slightly the previous day. In
London, ICE Brent <LCOc1> fell 59 cents to $83 a barrel.
The euro <EUR=> was down 0.16 percent at $1.3909.
Japan's Nikkei share average <> fell 1.7 percent to a
one-month low on signs of sluggish consumer electronics demand
while the MSCI index of Asia Pacific stocks outside Japan
slipped 0.3 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)
