| LONDON, March 3
LONDON, March 3 The dollar retreated on Friday
after two days of gains while world stocks pulled further back
from all-time highs as investors unwound positions on growing
expectations that the U.S. Federal Reserve will raise interest
rates later this month.
Fed officials have lined up to sing the need for higher
rates soon, sending the implied probability of a move this month
surging to 74 percent, from just 30 percent at the start of the
Fed Chair Janet Yellen and Vice Chair Stanley Fischer are
both due to speak later on Friday and are expected to stick to
the same tune.
The dollar index which measures the greenback's strength
against a basket of six major currencies was poised for its
fourth straight weekly gain, though it was about 0.1 percent
lower on Friday.
"The U.S. dollar has been snapped up across the board as a
March Fed hike is heavily priced in," said Sean Callow, a senior
currency strategist at Westpac.
"All it took was about a hundred comments from Fed
officials, but markets have finally decided that "fairly soon"
means less than two weeks and that perhaps 3 hikes this year
means 3 hikes this year."
Expectations of a Fed rate hike soured the party on Wall
Street, however, as financials led major U.S. indices lower.
That weakness spilled over to Europe where the benchmark STOXX
600 fell for a second day dragged lower by industrials
and consumer-related stocks.
The total market value of global stock markets hit an
all-time high of $56.7 trillion earlier this week, having added
more than $4 trillion since Donald Trump's election as U.S.
president last November.
More than half of those gains were down to the rally in U.S.
stocks, into which investors have pumped money for four of the
past five weeks, according to the latest data from Bank of
America Merrill Lynch and fund tracker EPFR.
Stock futures on the S&P 500 were down 0.3
percent as investors reassessed the market's lofty valuations in
the face of rising borrowing costs.
In Europe, economic data continued to point to a brightening
recovery as activity in euro zone businesses grew at its
quickest pace in nearly six years in February and job creation
reached its fastest in almost a decade.
Rising euro zone inflation, along with easing anxieties over
elections in France and growing talk of a March U.S. rate rise,
put Germany's benchmark 10-year government bond yield on track
for its biggest weekly rise since November's U.S. election.
In commodities, oil prices rose as the dollar edged away
from a multi-week high, though gains were held in check by
unchanged Russian output for February, a sign of its weak
compliance on a global deal to cut supplies.
Benchmark Brent crude futures were up 0.4 percent at
$55.29 a barrel after closing down 2.3 percent in the previous
session. WTI futures gained 16 cents, or 0.3 percent, to
(Additional reporting by Wayne Cole in SYDNEY; editing by