Reuters: US Dollar Report: GLOBAL MARKETS-Stocks, euro drop on Fed minutes, ECB head comments

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GLOBAL MARKETS-Stocks, euro drop on Fed minutes, ECB head comments Apr 4th 2012, 14:32 Wed Apr 4, 2012 10:32am EDT * World stocks down 1.5 pct; euro down vs dollar * Weak Spanish debt auction weighs * ECB keeps rates on hold, Draghi comments also pressure euro By Caroline Valetkevitch NEW YORK, April 4 (Reuters) - Global stocks dropped more than 1 percent and the euro fell to a 3-week low against the dollar on Wednesday after the U.S. central bank dampened hopes of further economic stimulus, underlining its divergence from a Europe facing recession. Comments by European Central Bank President Mario Draghi that the euro-zone economic outlook is subject to downside risks relating to the debt crisis and commodity prices further weighed on the euro, along with a weak Spanish bond sale. Draghi's comments came in a news conference after the ECB announced it was holding interest rates at record lows, as widely expected. The Federal Reserve's minutes from its March meeting, released Tuesday, suggested the appetite for another dose of quantitative easing, so-called QE3, has lessened. On Wednesday, data showed U.S. employers created 209,000 new private-sector jobs in March, slightly above forecasts. A separate report showed the pace of growth in the U.S. economy's services sector slipped in March. "My conclusion is the employment growth trend that we've seen over the last year remains in place, and we probably will see a decent employment number on Friday when the Department of Labor reports non-farm payrolls," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. U.S. stock exchanges will be closed on Friday for the Easter holiday when the U.S. monthly employment report, among the most widely watched economic indicators, is due to be released. Spain, firmly at the sharp end of the euro-zone crisis, raised less than hoped at a debt sale, focusing market attention on a European Central Bank that, as widely expected, held the region's borrowing costs at record lows. U.S. stocks opened sharply lower, while world stocks fell 1.5 percent. The Dow Jones industrial average was down 108.15 points, or 0.82 percent, at 13,091.40. The Standard & Poor's 500 Index was down 11.21 points, or 0.79 percent, at 1,402.17. The Nasdaq Composite Index was down 29.45 points, or 0.95 percent, at 3,084.12. An index of European shares fell 1.2 percent. The euro dropped more than 0.6 percent against the dollar to $1.31411. At the trough of $1.3105, it was the lowest since mid-March. COMMODITIES FALL Commodities fell broadly for a second day on the Fed comments, with Brent crude oil, the European benchmark, last down 56 cents at $124.30 a barrel, while gold extended Tuesday's 2 percent drop. A T-bill sale in Portugal met with better demand than the auction in Madrid, though the shorter-term nature of the debt meant its wider market impact was muted. {ID:nS8E7MB006] Following the twin auctions, yields on Spanish benchmark 10-year debt rose, and Spanish 5-year credit default swaps extended their early rise after the auction, up around 460 basis points. On Tuesday, Spain, which recently announced fresh budget cuts as it slides back into recession, said its debt level is on course to reach a 22-year high. Link this Share this Digg this Email Reprints

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