LONDON Feb 24 Bond market jitters spilled over
into stocks on Friday, pulling European indexes lower for a
third straight session, and the dollar was poised for a weekly
loss as "Trumpflation" trades lost momentum.
World stocks have hit record highs, emerging markets have
regained favour and the dollar has climbed to a 14-year peak in
recent weeks on expectations U.S. President Donald Trump's
economic agenda will stoke growth and inflation.
New U.S. Treasury Secretary Steven Mnuchin took the edge off
those expectations in his first televised interviews since he
took office last week, when he said any policy steps by the
Trump administration would probably have only a limited impact
That knocked the dollar back, leaving it to trade down on
the week and facing its first weekly loss in three. It was last
down 0.2 percent against a basket of other major currencies at
"Mnuchin's comments were less belligerently reflationary
than they could have been, in a dollar strength context, and
that probably did much of the damage (to the dollar)," said UBS
Wealth Management currency strategist Geoffrey Yu, in London.
Subdued forecasts from European blue chips, including BASF
and Vivendi, and a drop in mining shares
following overnight declines in metals prices dragged the
benchmark STOXX 600 index down 1 percent.
Shares of Standard Chartered and Royal Bank of
Scotland fell about 3 percent after results, putting
pressure on the regional banking index.
Futures on Wall Street fell 0.4 percent.
Political concerns around elections in Europe have so far
largely affected bond markets. The extra return investors demand
to hold French rather than German debt, for example, hit
multi-year highs earlier this month on concern far-right Marine
Le Pen was gaining ground in the country's presidential
French stocks had remained largely unscathed, rising
to levels last seen in December 2015. But the CAC 40 share index
fell 1.5 percent on Friday, on track for its worst day in nearly
five months, a sign that stock investors are catching up to bond
French equities are "too relaxed", UBS warned on Friday
noting that the gap between the CAC40 and government bond spread
was its widest since 2012, suggesting equity investors were
turning a blind eye to the selloff in bonds.
In commodity markets, London copper prices recovered as
doubt about Chinese demand returned. Three-month copper on the
London Metal Exchange was up 0.8 percent at $5,907 a
tonne after falling 3 percent the day before.
Gold hit its highest in more than three months on a weaker
dollar and safe-haven demand. Spot gold was up 0.4
percent at $1,254.10 per ounce.
Oil prices fell after U.S. crude inventories rose for a
seventh week. Benchmark Brent crude oil was down 43
cents at $56.06 a barrel. U.S. West Texas Intermediate
traded at $54.01 a barrel, down 44 cents.
(Reporting by Vikram Subhedar; editing by Larry King)