subject: US Dollar slips while gold stocks reach another high [print this page] The dollar hit a five-month low against the euro and a three-week rally in global shares slowed after the Federal Reserve opened the door to more monetary easing, signaling the depth of its concern over weak growth.
Gold hit record highs on the prospect of more U.S. stimulus and a weaker dollar, while prospects of more cash flowing through the system boosted shares and currencies in developing economies that are outperforming Europe and the United States.
Dollar tumbles, global shares mixed as Fed easing eyed.
The Fed on Tuesday said it stood ready to pump new dollars into the economy -- a second round of so-called quantitative easing. It made no policy shift but the statement was more explicit than those from previous meetings, analysts said.
European stocks fell and Wall Street shares stood little changed as investors were torn between expectations for Fed help and the message of a faltering economic recovery. They were also uncertain if moves by the Fed would be enough to ward off recession.
"The Fed's policy statement was the strongest hint yet that increased policy easing ... will be implemented if upcoming economic indicators continue to point to a recovery that is losing momentum," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange Inc in Washington.
The Dow Jones industrial average was down 7.03 points, or 0.07 %, at 10,754.00. The Standard & Poor's 500 Index fell 2.76 points, or 0.24 %, at 1,137.02. The Nasdaq Composite Index was off 13.11 points, or 0.56 %, at 2,336.24.
The FTSEurofirst 300 index fell 0.3 %, recovering some earlier losses, while firmer Asian and other emerging market shares boosted the MSCI world equity index 0.7 %. Emerging market stocks rose 0.6 %.
The Thomson Reuters global stock index gained 0.4 %.
Investors' major concern in Europe remains the level of government debt and persistent worries about Ireland's fiscal deficit pushed the spread of its 10-year bond yield over German Bunds to euro lifetime highs of 425 basis points.
The Portuguese spread also hit a euro lifetime high of 406 bps, before dropping back to 391 bps after a successful bond auction.
The dollar fell 1 % against a basket of major currencies. The euro rose as high as $1.3440, its strongest since April. At mid-morning in New York, the euro had gained 1.24 % to $1.3415. Against the Japanese yen, the dollar fell 0.71 % to 84.49 yen.
The sliding dollar helped gold, which rose to a record high above $1,296 an ounce. U.S. crude oil rose 0.75 % to $75.53 a barrel.
"It looks like the hurdle for (quantitative easing) has been lowered and the Fed is more concerned about the inflation picture," said Nick Stamenkovic, rate strategist at RIA Capital, who added that the Fed may act as early as November.
Yields on benchmark U.S. Treasuries fell to their lowest levels in three weeks as prices extended a rally from Tuesday when the Fed raised prospects of more quantitative easing. This easing could be in the form of Treasury bond purchases, some economists said.
The yield on the benchmark 10-year Treasury note declined 0.04 %age point to 2.54 %.
US Dollar slips while gold stocks reach another high
