World shares, oil slip on Fed stimulus nerves

LONDON Fri Jan 4, 2013 2:23pm IST

Tokyo Stock Exchange (TSE) employees are seen at the bourse before a ceremony marking the end of trading in 2012, at the Tokyo Stock Exchange in Tokyo December 28, 2012. REUTERS/Kim Kyung-Hoon

Tokyo Stock Exchange (TSE) employees are seen at the bourse before a ceremony marking the end of trading in 2012, at the Tokyo Stock Exchange in Tokyo December 28, 2012.

Credit: Reuters/Kim Kyung-Hoon

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LONDON (Reuters) - World shares, oil and copper edged lower on Friday and the dollar rose after U.S. Federal Reserve officials raised concerns about possible side effects of its stimulus programme.

Minutes from the Fed's December policy meeting unsettled financial markets as some policymakers raised the longer-term impact of its efforts to simulate the U.S. economy.

The Fed's bond-buying has underpinned appetite for risk, and the comments that raised the possibility it might be less committed to the programme than previously thought unnerved investors before U.S. employment data later on Friday.

European shares echoed their Asian peers to open lower. But following a sharp jump on Wednesday after the United States edged back from the "fiscal cliff", they were on track for weekly gains of almost 2.7 percent.

London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX were down between 0.1 and 0.4 percent by 0810 GMT, while the pan-European FTSEurofirst 300 was down 0.15 percent and the MSCI index of world shares 0.2 percent lower at 345.91.

Euro zone PMI and inflation figures plus the U.S. non-farm payrolls report due through the day will be closely scrutinised by investors looking to assess the health of the global economy.

"The Fed has made it clear that it will keep policy loose until unemployment drops to 6.5 percent or below, so strong jobs data will undoubtedly raise expectations of a more hawkish Fed," analysts at Tradition brokerage said in a note.

The Fed comments gave fresh momentum to the recent slide by low-risk bonds including U.S and German debt. Bund futures slipped half a point in early trading to 143.07, having already fallen steeply from last week's close of 145.64.

Benchmark U.S. Treasury yields continued their climb, hitting an eight-month high around 1.93 percent in Asia, while 10-year Japanese government bond yields touched a 3-1/2-month high of 0.83 percent.

In the currency market the dollar rose, hitting its highest since July 2010 against the yen at 87.835 while the euro fell to a three-week low of $1.3019. The dollar also touched a six-week high against a basket of major currencies.

The dollar's rise makes dollar-based assets more expensive for non-dollar investors and its rise hit precious metals and oil.

Brent crude shed 0.6 percent to $111.47 while gold fell 1 percent to $1,645, dragging silver down more than 2 percent to $29.48.

(editing by David Stamp)

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