* Singapore widens trading band; currency at record high
* Dollar index touches year's low, world stocks gain
* Gold prices set for fifth consecutive weekly rise
(Adds close of U.S. markets)
By Jennifer Ablan
NEW YORK, Oct 14 (Reuters) - The U.S. dollar index hit its
lowest this year and world stocks rose modestly on Thursday
after Singapore let its currency strengthen, spurring gains in
most major currencies against the struggling greenback.
The Australian dollar, which boasts the highest yield among
major currencies, soared to its strongest since the currency
was floated in 1983 at $0.9994 <AUD=D4> and was poised near
parity.
Investors continued to dump the dollar against the backdrop
of Singapore's move and on rising expectations the Federal
Reserve will engage in another round of "quantitative easing"
-- effectively printing money to buy assets.
The Singapore dollar <SGD=> hit a record high while the
Chinese yuan <CNY=CFXS> hit its highest closing level against
the U.S. dollar since July 2005. See []
Singapore's decision to widen and raise the trading band
for the Singapore dollar -- an indication Asian economies are
now strong enough to tolerate monetary tightening -- follow the
recent move by emerging market power Brazil to curb currency
appreciation. Similarly, Thailand is also considering a tax on
speculative capital inflows.
"Effectively the Singapore move is a tightening of policy
and it clearly shows Asian economies are at the opposite end of
the spectrum compared to the spare capacity in the U.S.
economy," said Chris Turner, head of FX strategy at ING.
Speculation of aggressive monetary action from the Federal
Reserve intensified further after a government report showing
new U.S. claims for first-time jobless benefits rose last week
For details, see []
Gold, one of the market's favorite safe haven securities,
hit a record high of $1,387.10 an ounce in early New York trade
and were set for their fifth consecutive weekly rise.
DOLLAR IN THE DUMPS
The dollar was down against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
down 0.68 percent at 76.549 from a previous close of 77.071.
The euro <EUR=>, which earlier surged to a more than
eight-month high of $1.4123 on trading platform EBS, traded up
0.84 percent at $1.4079 at New York's close. The currency was
up from a previous session close of $1.3962.
Against the Japanese yen, the dollar was down 0.37 percent
at 81.47 from a previous session close of 81.77.
The currency markets weren't alone in the spotlight. Spot
gold prices <XAU=> hit a record of $1,387.10 an ounce early
Thursday, but traded at $1380.20, rising $9.10, or 0.66
percent.
Ashraf Laidi, chief market analyst at CMC Markets in
London, said that once the United States' second round of
quantitative easing "becomes the new normal, selling pressure
on the U.S. dollar could well ease as traders begin
anticipating the days of similar moves by the Bank of England
and the ECB."
Global stock indexes gained, with the MSCI world equity
index <.MIWD00000PUS> up over 0.35 percent to 317.50, but the
Thomson Reuters global stock index <.TRXFLDGLPU> dipped 0.96
percent, after hitting two-year highs.
In the United States, benchmark indexes were down. The Dow
Jones industrial average <> was down 1.51 points, or 0.01
percent, at 11,094.57. The Standard & Poor's 500 Index <.SPX>
was down 4.29 points, or 0.36 percent, at 1,173.81. The Nasdaq
Composite Index <> was down 5.85 points, or 0.24 percent,
at 2,435.38.
European shares moved in sympathy with U.S. markets,
dragged by worries over the banking sector's health. The
pan-European FTSEurofirst 300 <> index of top shares
provisionally closed 0.17 percent lower at 1,084.67 points.
U.S. Treasury debt prices were lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 25/32, with the yield at 2.51 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at 0.38
percent. The 30-year U.S. Treasury bond <US30YT=RR> was down
56/32, with the yield at 3.92 percent.
In energy and commodities prices, U.S. light sweet crude
oil <CLc1> fell 27 cents, or 0.33 percent, to $82.74 per barrel
and the Reuters/Jefferies CRB Index <.CRB> was up 0.19 points,
or 0.06 percent, at 299.93.
(Additional reporting by Steven C. Johnson in New York;
Editing by Andrew Hay and Chizu Nomiyama)
