* Bond buyers find value after post-US job data sell-off
* Euro rises above $1.40, dollar buying runs out of steam
* Oil rises above $69 as dollar eases
* Wall Street stocks edge higher, Texas Instuments gains
(Updates with U.S. markets activity; changes dateline,
previous LONDON)
By Herbert Lash
NEW YORK, June 9 (Reuters) - The U.S. dollar fell on
Tuesday as investors questioned whether an improving economy
warrants talk of higher U.S. interest rates this year after
all, while government debt prices rose as investors saw value
after last week's sell-off.
The euro rose above $1.40 and sterling rallied sharply
after the U.S. Treasury said 10 of the biggest American banks
could repay $68 billion in taxpayer money received during the
height of the credit crisis, boosting hopes the worst is over.
Still, investors were less certain that the Federal Reserve
would raise rates by year's end, a view that had gained
traction last week after data showing a slower pace of U.S. job
losses in May boosted the dollar and two-year Treasury yields.
U.S. and euro zone government bond prices rose as investors
bought cheaper paper, viewing the sell-off of recent sessions
as overdone, given the still fragile state of the economy.
"The market is waking up and realizing that the idea that
recovery is just around the corner and central banks will be
normalizing policy before the end of the year does seem to be
somewhat an aggressive proposition," said Richard McGuire, a
rate strategist at RBC Capital Markets.
Michael Woolfolk, currency strategist at The Bank of New
York-Mellon, said there was a "very trivial chance that the
United States will see significant inflation in the next 12
months."
"I fully expect the dollar to trend weaker over the next
several weeks unless big problems in Europe develop," he said.
U.S. and European stocks initially rose after the Treasury
announced the bank repayment plans, but U.S. equities soon
faltered, hovering above break-even.
Investors set their sights on a 3-year Treasury note
auction, worried that an oversupply of government debt could
push interest rates still higher and increase the cost of
borrowing to consumers and businesses.
"It's one of the biggest things driving the market
recently," said Bennett Gaeger, managing director at Stifel
Nicolaus in Baltimore.
Stock markets on both sides of the Atlandic edged higher
after chip maker Texas Instruments Inc <TXN.N> raised its
quarterly revenue and earnings targest, signaling improving
demand in the chip market. []
Shares of Texas Instruments rose 6 percent to $20.95.
The Dow Jones industrial average <> was down 6.27
points, or 0.07 percent, at 8,758.22. The Standard & Poor's 500
Index <.SPX> was up 2.12 points, or 0.23 percent, at 941.26.
The Nasdaq Composite Index <> was up 15.61 points, or 0.85
percent, at 1,858.01.
The FTSEurofirst 300 <> index of top European shares
closed up 0.5 percent provisionally at 869.06 points.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
9/32 in price to yield 3.86 percent. The 2-year U.S. Treasury
note <US2YT=RR> rose 5/32 in price to yield 1.33 percent.
In currencies, the dollar was down against a basket of
major currencies, with the U.S. Dollar Index <.DXY> off 0.98
percent.
The euro <EUR=> rose 0.95 percent at $1.4027, and against
the yen, the dollar <JPY=> fell 0.89 percent at 97.55.
U.S. light sweet crude oil <CLc1> rose $1.29 to $69.38 a
barrel.
Spot gold prices <XAU=> rose $6.00 to $956.05 an ounce.
Asian shares fell overnight as investors worried a
three-month rally may be overdone. The MSCI Asia-Pacific index
of stocks outside Japan <.MIAPJ0000PUS> fell 1.2 percent, while
Japan's Nikkei average <> retreated 0.8 percent.
(Reporting by Rodrigo Campos, Steven C. Johnson, Ellen
Freilich in New York; Chris Baldwin, Kirsten Donovan, Ian Chua
in London; writing by Herbert Lash)
