Reuters: US Dollar Report: GLOBAL MARKETS-Shares pause below 8-mth high, eyes on US data

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GLOBAL MARKETS-Shares pause below 8-mth high, eyes on US data Mar 21st 2012, 10:31 Wed Mar 21, 2012 6:31am EDT * U.S. recovery hopes outweigh China slowdown fears * Benchmark Bund yields hit three-month high * U.S. home sales eyed By Philip Baillie LONDON, March 21 (Reuters) - World stocks held near eight-month highs on Wednesday while German 10-year yields hit a three-month peak as investors bet further evidence of a U.S. economic recovery would boost risky assets and ease concerns about slowing growth in China. The measured appetite for risk saw safe-haven government bonds extend their recent sell-off. Markets awaited U.S. February existing home sales figures due at 1400 GMT, seeking confirmation that supply is being whittled down. Economists in a Reuters survey forecast a rise to 4.62 million unit sales from 4.57 million in January. U.S. stock markets pointed to a higher open while the MSCI world equity index was unchanged on the day, following a rally of more than 10 percent since January that stalled after it reached it highest level since August on Monday. "This week's retreat is a sign of normal breathing by the market, and more people are jumping on the bandwagon. The liquidity rally is not over," said Franz Wenzel, head of investment strategy at AXA Investment Managers. "That said, there are a few signs of 'liquidity fatigue' creeping in, with the probability of (another round of central bank asset buying) in the United States declining and people starting to discount interest rate hikes by the Fed earlier than the timeframe set by the central bank." In Europe, the FTSEurofirst 300 index was also flat while emerging stocks gained 0.1 percent. Ahead of the open on Wall Street, futures for the Standard & Poor's 500 Index were up 0.24 percent, Dow Jones futures up 0.15 percent and Nasdaq 100 futures up 0.2 percent. "Yesterday the (U.S.) construction figures, especially the building permits, came in surprisingly positive ... this would dispel speculation over further easing measures from the Fed," said Viola Stork, analyst at Landesbank Hessen-Thueringen. CONTRASTS Brighter signs in the United States contrasted with a more subdued picture in China, where home prices fell in February for a fifth consecutive month and are expected to continue heading south in coming months. Safe-haven sovereign bonds eased, with German bund futures dropping 26 ticks and yields on the country's 10-year bonds reaching 2.07 percent, their highest level since mid-December. U.S. Treasury yields were near five-month highs at 2.3754 percent, though they remain near historic lows. The 10-year yield of 1.67 percent in September 2011 was the lowest in at least 60 years. Brent oil rose 0.3 percent to $124.42 a barrel. Oil prices pulled back from sharp losses after a surprise drawdown in U.S. crude stocks and a weaker dollar offset the prospect of increased supply from top exporter Saudi Arabia. The yen dipped to a fresh five-month low of 111.34 per euro and hit a nine-month trough against sterling , staying on the defensive in the wake of the Bank of Japan's monetary easing last month. The dollar fell 0.2 percent against a basket of major currencies while the euro gained 0.4 percent to $1.3262. Sterling fell to session lows against the dollar after dovish minutes from the Bank of England's last monetary policy committee meeting and higher-than-expected UK government borrowing. Link this Share this Digg this Email Reprints

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