* Dollar index hits 8 1/2-mth low, dollar struggles broadly
* Ongoing Fed QE speculation pushes stocks, commodities up
* U.S. Treasury futures hit highest since Jan. 2009
(Updates throughout; previous SINGAPORE)
By Naomi Tajitsu
LONDON, Oct 6 (Reuters) - The dollar hit an 8 1/2-month low
while global stocks hit a five-month high on Wednesday as
speculation of more U.S. monetary stimulus grew in the aftermath
of easing moves by Japan.
U.S. Treasury prices <TYv1><US2YT=RR> rallied to their
highest since early 2009 after Chicago Fed President Charles
Evans was quoted on Tuesday as saying the central back should
conduct "much more" monetary easing. []
The prospect that the Fed and other central banks would have
to push more money into their economies has eroded confidence in
the dollar and other currencies, raising the appeal of gold,
which hit a record high on Wednesday <XAU=>.
At the same time, such measures, which some in the market
believe may come as early as next month, would boost the U.S.
economy and add to the global recovery, which is positive for
stocks and commodities.
"Central banks are moving towards additional stimulus in the
United States and Japan, but as important, growth data has been
good relative to expectations and there's been an improving
trend," said Ronan Carr, European equity strategist at Morgan
Stanley.
Speculation of more easing has ratcheted higher since the
Bank of Japan on Tuesday cut interest rates close to zero and
said it would pump cash into the financial system through asset
purchases. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Trade weighted exchange rates: http://r.reuters.com/qun86p
Global interest rates: http://link.reuters.com/wed86p
BOJ policy rate: http://link.reuters.com/syz76p
Yen - taking on the market: http://r.reuters.com/fac44p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
By 1040 GMT, the dollar index <.DXY>, which tracks the U.S.
currency's value against a currency basket, had slumped to
77.570, its lowest since January.
It fell to an eight-month low against the euro and, at 82.97
yen <JPY=>, was closing in on a 15-year low of 82.87 yen hit
last month before Japanese authorities entered the currency
market to stem the yen's strength against the dollar.
European equities tracked a climb in Asian shares earlier on
Wednesday, pushing the MSCI world equity index <.MIWD00000PUS>
up 0.7 percent to 312.65, its highest since April. The
FTSEurofirst 300 index <> rose 0.8 percent to 1,075.45.
U.S. crude oil <CLc1> rose to $83.33, its highest since May.
Spot gold jumped to an all-time high just below $1,350.
"The trust in the FX markets and currencies in general is
disappearing. Now with the dollar weakness, it's strong support
for gold," a Europe-based trader said.
Direct currency intervention, rock-bottom interest rates and
more monetary easing has sparked concerns of a "currency war",
prompting a warning from IMF Managing Director Dominique
Strauss-Kahn on Tuesday. []
U.S. PAYROLLS AHEAD
Analysts said that while the prospect of more quantitative
easing was helping to boost some demand for riskier assets,
investors were wary of taking their rally too far ahead of U.S
jobs data on Friday.
Non-farm payrolls for September will help gauge if the
struggling jobs market is improving. A weak reading would crank
up anticipation of a swift move by the Fed on QE.
"There's still some concerns that the U.S. may be heading
for a double dip, so the payrolls will be crucial in directing
the market on how to deal with risk going forward," said Johan
Javeus, head of global strategy at SEB in Stockholm.
In the lead-up to the payrolls data, investors were awaiting
U.S. data on Challenger U.S. job cuts and the ADP employment
report due later on Wednesday.
(Additional reporting by Simon Falush and Amanda Cooper;
Editing by Patrick Graham)
