3/9/2004 7:15:00 AM UK trade deficit grew to a record 5.6 billion stg, (exp 4.2 bln stg, prev 4.2 bln stg)
Ignored
3/9/2004 4:45 pm: EUR/$..1.2321
Dollar Rallies as Euro FX Fail to Undo Resistance @ 1.2450, followed by increased pressure at 1.2485-90 area, which is the 50% retracement of the 1.2926-1.2227 slide. Subsequent resistance stands at 1.2540.
LONDON: European shares pulled back sharply from 20-month highs, hurt by worries over valuations of technology stocks and a slide in the Nasdaq while the dollar clawed back some ground against the euro on Tuesday.
European government debt prices fell despite the weaker tone in equity markets in the region, a mixed performance on Asian bourses and falls on Wall Street the previous session.
Gold edged higher and crude oil prices surged. European shares dipped by around one per cent on Tuesday, led lower by technology shares and autos.
Technology stocks were weaker after an overnight sell off on the Nasdaq overshadowed a positive first-quarter update from US chipmaker Texas Instruments and sharp February sales gains from Taiwan’s TSMC, the world’s largest microchip maker.
"Expectations for techs have been very high and this is partly a valuation call. But in this kind of directionless market, it is the natural instinct of investors to sell high beta tech shares," said Rolf Elgeti, chief European strategist at Commerzbank.
German car maker Volkswagen’s prediction of a "lousy" first quarter sent autos lower. The FTSE 300 index of leading European shares was down 0.8 per cent at 1,018 points at 1120 GMT with the narrower DJ Euro Stoxx 50 Index down 0.9 per cent at 2,932.5.
Earlier on Wednesday Asian bourses ended mixed with Japan’s TOPIX ending up 0.2 per cent at a 21-month high but Hong Kong and Singapore finishing down.
MSCI’s broad index of Asian shares outside Japan was flat. In New York, the Nasdaq was down nearly two per cent on Monday and the Dow Jones fell 0.6 per cent.
The dollar bounced higher against the euro after being sideswiped by dismal US employment numbers on Friday. Investors had been more sanguine on the US economy, helping the greenback early last week, but Friday’s figures showing the US is still not creating new jobs put back expectations of a dollar-boosting interest rate rise.
The dollar was up 0.2 per cent versus the euro at $1.2379, well ahead of its record low above $1.29 hit in February. "For the euro it has turned somewhat into a ‘sell on the up-ticks’ strategy and for the dollar to a ‘buy on dips’ strategy," said Peter Wuyts, market analyst at KBC in Brussels.
The dollar also rose against the yen despite suspicions that Japan had stopped its dollar purchases which pushed the dollar down a full yen in New York on Monday.
The dollar was up 0.2 per cent at 111.42 at 1120 GMT. Sterling dropped around half a per cent against the dollar, hitting a two-week low after data showing the UK’s goods trade deficit hit a record 5.6 billion pounds in February and weaker than expected manufacturing output growth.
The market will now focus its attention on a speech by US Treasury Secretary John Snow at 1430 GMT.
European government bond yields rose from around eight-month lows on Tuesday as earlier euro-related gains in Asia ebbed.
Traders said Argentina, on the edge of a new default with the International Monetary Fund on Tuesday, was expected to give US Treasuries support and might help euro debt issues too.
The Latin American state has until 2200 GMT to pay the IMF $3.1 billion or face a second default in six months. At 1120 GMT, the two-year Schatz yield was up 1.6 basis points at 2.15 per cent. The 10-year Bund yield was up 1.7 basis points at 3.94 per cent.
Safe-haven gold rose a touch to $400.50/$401.00 from its New York close around $400.50. Crude oil futures rose 19 cents to $32.96 on continued supply worries. "
