* Dollar climbs after Yellen's upbeat labour market comments
* European shares steady after attacks in Germany, Turkey
* Gold down as Fed comments offset attacks' impact
* Yen slides as BOJ says to maintain loose policy
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Dec 20 The dollar hit a 14-year high on
Tuesday as the yen fell after the Bank of Japan stuck to its
ultra-loose monetary policy and the euro weakened following
deadly attacks in Germany and Turkey.
On Wall Street, the Dow appeared set for another run at
20,000 points, as concern after the attacks in Europe
were offset by reassurance over Italy's plan to spend
up to 20 billion euros ($21 billion) to rescue its troubled
On currency markets, a sense of caution after a truck
ploughed into a Christmas market in Berlin, killing 12, sent the
safe-haven Swiss franc towards a six-month high versus the euro
and pushed the common currency firmly back below
But the dollar and rising bond yields
again dominated, after the head of the Federal Reserve flagged
the strength of the U.S. jobs market in a speech to students on
That sent the greenback up almost half a percent against a
basket of major currencies to 103.65, its strongest since
Its gains were strongest against the yen, which slid around
1 percent after the Bank of Japan, shrugging off the yen's
recent slump, said it would keep monetary policy loose.
"The biggest impact you see from the attacks in Berlin and
(Ankara) is the Swiss franc/euro," said Societe Generale FX
strategist Alvin Tan.
"But apart from that the dollar continues to be strong after
we had some rather positive comments from Janet Yellen."
Benchmark 10-year U.S government bond yields, which set the
bar for global borrowing costs and have been rising hand-in-hand
with the dollar over the last few months, were at 2.57 percent
having earlier topped 2.58 percent.
The greenback has risen 12 percent versus the yen since
Donald Trump's surprise presidential election victory, on his
promises of increased fiscal stimulus. The win was made official
on Monday after he got the required Electoral College votes.
Modest 0.3 percent gains for European shares came
after MSCI's broadest index of Asia-Pacific shares outside Japan
had ended down 0.3 percent due fifth straight
day of losses for emerging markets stocks.
China's CSI 300 index slid 0.6 percent, on
Beijing's move to tighten supervision of shadow banking
activities and on liquidity concerns, while Japan's Nikkei
closed up 0.5 percent after a late BOJ-linked rally.
"There was no particular surprise from the policy meeting,
but investors are happy that the economy's fundamentals are
finally rising after the BOJ expressed an upbeat view," said
Takuya Takahashi, a strategist at Daiwa Securities.
Wall Street was expected to nudge higher having tailed off
slightly on Monday as risk aversion set in following the deaths
in Germany, the shooting dead of Russia's ambassador in Turkey,
and a gun attack in a mosque in Switzerland.
Chancellor Angela Merkel said of the attack in Berlin:
"There is much we still do not know with sufficient certainty
but we must, as things stand now, assume it was a terrorist
The lira initially rallied on relief that Moscow and Ankara
struck a unified tone after the Ankara attack, but took a dive
after the country's central bank unexpectedly kept interest
rates on hold having been widely forecast to raise them.
The currency has lost 17 percent of its value against the
dollar this year, hit by investor concerns about a crackdown by
authorities in the aftermath of a failed coup in July and by a
resurgent dollar following Donald Trump's U.S. election win.
The rouble though was up at 61.6554 per dollar and safe
haven gold, which rose 0.4 percent on Monday, pulled back
0.7 percent to $1,130 an ounce, as the prospect of further U.S.
rate hikes outweighed political concerns.
Oil prices also rose as traders positioned for weekly U.S.
crude oil inventories. Analysts polled by Reuters expected them
to show a draw of 2.4 million barrels in the week ending Dec.
U.S. crude was at $52.45 per barrel and global
benchmark Brent rose to $55.50 after Russia's energy
minister was also quoted saying the country may extend a
production cut beyond the first half of next year if needed.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
($1 = 0.9634 euros)
(Additional reporting by Nichola Saminather in Singapore;
Editing by John Stonestreet and Hugh Lawson)