- LONDON (Reuters) -- Gloom
swept across European and Asia stock markets again on Friday as Wall Street's
disappointing performance overnight raised fears that a longed-for equities
rally may not happen for some time to come.
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- The dollar strengthened against the Japanese yen -- on
signs that U.S. fund managers were selling Asian shares -- and was slightly
higher against the euro. Bond prices rose, knocking yields, as investors
jumped into safe government-backed obligations.
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- A brief bout of euphoria on battered share markets, triggered
by a hefty rally in New York on Wednesday, evaporated after Wall Street
returned to its losing ways on Thursday.
-
- "Market sentiment is completely shot at the moment,"
said Masaharu Sakudo, adviser at Tachibana Securities.
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- New worries also emerged about the state of the U.S.
and European economies. The U.S. government reported on Thursday that durable
goods orders in June fell 3.8 percent.
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- A key measure of German business confidence unexpectedly
fell, Dutch firms scaled back forecasts for the third month in a row and
British June retail sales hit a two-year trough.
-
- With the Nasdaq losing nearly four percent on the poor
outlook for technology stocks and other U.S. indices registering smaller
losses, European stocks headed back down toward five year lows.
-
- The FTSE Eurotop 300 index of pan-European blue chips
fell more than 1.6 percent and the narrower DJ Euro Stoxx 50 index lost
about 2.3 percent.
-
- Key French, German and British indices were all down
sharply.
-
- Tokyo's Nikkei average had earlier finished down more
than three percent to a five-month closing low.
-
- It fell victim to the intense nervousness on Wall Street,
as foreign fund managers pressed the sell button to repatriate cash and
meet hefty cancellations at home, traders said.
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- The Nikkei closed off 3.41 percent at 9,591.03. The broader
TOPIX index ended down 2.57 percent at 943.07.
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- DOLLAR MAKES YEN GAINS
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- U.S. stock market woes boosted the dollar, sending it
up one yen against the Japanese currency, as U.S. fund operators were reported
to be selling off Japanese and other Asian stocks to cover equity losses
at home.
-
- "The big picture seems to be that concern about
the U.S. economy is now becoming concern about the world economy and what
that means for other countries and their growth outlook," said Rob
Hayward, senior currency strategist at ABN Amro.
-
- The dollar was at 117.43 yen. Against the euro, the greenback
was trading at $1.0004 per euro, up around half a percent.
-
- The dollar has been falling steadily against major currencies
for much of the year as investors pulled out of U.S. assets in the face
of corporate accounting scandals and profits weakness.
-
- Underlining this trend, the European Central Bank data
showed on Friday that the euro zone saw combined net inflows of direct
and portfolio investment surge to 37.1 billion euros in May from an already
high 19.3 billion in April.
-
- European debt yields fell back toward this week's multi-month
lows on the resumed stock market their slides.
-
- The interest rate sensitive two year Schatz yield was
down 2.1 basis points 3.63 percent, moving toward Wednesday's six-month
lows of 3.55 percent
-
- The benchmark 10-year Bund yield was 2.3 basis points
lower at nearly 4.72 percent.
-
- Yields on benchmark 10-year U.S. Treasuries were down
more than two percent at 4.3623 percent.
-
- Oil prices lost ground when data showing a sluggish U.S.
economic recovery caused worries that there would not be sufficient demand
to soak up any increase in OPEC oil output later in the year.
-
- By 5:50 a.m. EDT benchmark Brent crude for September
was down 17 cents at 25.09 a barrel.
-
- Production curbs by the Organization of Petroleum Exporting
Countries have helped prop up oil prices in the face of sagging demand
from the world's biggest energy user, the United States.
-
- But OPEC is expected to set a higher output ceiling when
the cartel gathers in September in order to meet winter fuel demand.
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