Reuters: US Dollar Report: GLOBAL MARKETS-Shares retreat as Fed minutes soften stimulus bias

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GLOBAL MARKETS-Shares retreat as Fed minutes soften stimulus bias Apr 4th 2012, 00:16 Tue Apr 3, 2012 8:16pm EDT * MSCI Asia ex-Japan down 0.4 pct * Nikkei opens nearly flat * Gold pressured as dollar firms By Chikako Mogi TOKYO, April 4 (Reuters) - Asian shares eased on Wednesday after the minutes from the U.S. Federal Reserve's March meeting suggested the bank was less likely to take further stimulus measures, leaving investors looking for more clues over global growth outlook. The minutes showed Fed policymakers, while noting signs of slightly stronger growth, remained focused on a still elevated jobless rate. But the minutes suggested the appetite for further quantitative easing, so-called QE3, has waned significantly in light of improving U.S. economy. World stocks fell, gold prices dropped 2 percent and Treasuries slid while the dollar gained on Tuesday. MSCI's broadest index of Asia Pacific shares outside Japan fell 0.4 percent, while Japan's Nikkei average opened nearly flat. "The Fed statement is consistent with our view that the economic environment would have to deteriorate to justify further asset purchases," Barclays Capital analysts said. "We expect market focus to stay on global growth, as this holds the key to dissipating solvency concerns in developed markets," they said. Spot gold steadied, but U.S. gold futures extended losses early on Wednesday, falling 1.57 percent to $1,645.8 an ounce. Weaker gold prices dragged the Australian stock market lower, weighing on mining companies. More Fed stimulus would be tantamount to printing money and depreciate the dollar's value, which in turn would enhance the appeal of gold. Diminished expectations of QE3 lifted the dollar index against a basket of key currencies to a one-week high, and pushed the U.S. currency against the yen up from a three-week low of 81.55 yen. The dollar steadied on Wednesday. Benchmark 10-year Treasury yields rose to 2.28 percent on Tuesday, up from around 2.18 percent before the minutes were released, also helping to underpin the dollar. Shanghai and Hong Kong markets are closed on Wednesday, while European, U.S. and some Asian markets will be closed on Friday for the Easter holiday. The markets will face key U.S. nonfarm payrolls data on Friday, which could offer further evidence for a reduced need of additional monetary measures to spur faster economic growth. The U.S. economy likely notched up a fourth month of solid job growth in March and is expected to have added 203,000 jobs last month, according to a Reuters survey, after nonfarm payrolls rose 227,000 in February. Oil steadied after falling on the Fed news, with U.S. crude futures were barely changed at $103.96 a barrel on Wednesday. Brent settled down 0.45 percent at $124.86. A rise in oil prices is one indication for recovery staying on track, and concerns about high oil prices hurting U.S. growth may be overblown, some argue. "U.S. gasoline demand falling to its weakest since 2001 in January suggests the impact from rising oil prices is not as damaging to consumer sentiment and the broad economy as in the past when demand for gasoline was strong," said Tetsu Emori, a Tokyo-based commodities fund manager at Astmax Investments. Link this Share this Digg this Email Reprints

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