By Ian Chua
LONDON, Feb 28 (Reuters) - The dollar found a steadier
footing on Thursday after having slumped to a record low against
a basket of currencies, and both gold and oil took a breather as
investors cashed in on the recent run to all-time highs.
A mixed bag of corporate results kept European stock markets
under a bit of pressure with investors, already fretting about
the health of the U.S. economy, keeping a close eye on profits.
A recent flow of negative economic data that fed U.S.
recession fears and comments from Federal Reserve Chairman Ben
Bernanke bolstered expectations there will be more U.S. interest
rate cuts to come.
Delivering the Fed's semi-annual report on the U.S. economy
to Congress on Wednesday, Bernanke said It was "important to
recognize that downside risks to growth remains", signalling a
readiness to lower rates to prevent further damage to the
economy.
Bernanke will continue his testimony [] to the
House Finance Services Committee later on Thursday.
"We've just had a big move driven by Bernanke who confirmed
market expectations of a rate cut of 50 basis points and
probably more to come," said Derek Halpenny, senior currency
economist at BTM-UFJ.
"Now markets are inevitably pausing and consolidating, but
any pause will be fairly brief as breaking through these levels
provides a catalyst to go further," he added.
The dollar index <.DXY>, which tracks its performance
against six major currencies, edged up 0.1 percent to 74.298,
but was still not far off Wednesday's record low of 74.070.
The euro, which broke through the psychological $1.50 level
on Wednesday and went on to hit an all-time high of $1.5144, was
trading just below $1.51 <EUR=>.
Markets are giving a strong chance of a 50 basis point cut
to the 3.0 percent fed funds rate at the March policy meeting
and a small risk of a bigger 75 point cut. <FEDWATCH>
U.S. crude <CLc1> eased 55 cents to $99.08, climbing off the
record high above $102 set on Wednesday, while gold <XAU=> was
at $955.20, down from the record high of $964.70 set in the
previous session.
Even European credit spreads were relatively steady, drawing
breath after a sharp rally earlier in the week. The
investment-grade Markit iTraxx Europe index <ITRAC5EA=GFI> was
at 107.5 basis points, according to data from Markit.
"It kind of feels like the music's stopped for a while,"
said a trader in London.
STOCKS SOFT
But mixed corporate results kept equity investors cautious.
The FTSEurofirst 300 <> index of top European shares eased
0.4 percent with Germany's DAX <> 0.3 percent lower.
Insurer Axa <AXAF.PA> and drug and chemical group Bayer
<BAYG.DE> both fell after disappointing investors with their
results, but Royal Bank of Scotland <RBS.L>, Britain's
second-biggest bank, rose after posting in-line earnings and
raising its dividend.
Earlier, Japan's Nikkei <> fell 0.8 percent as
investors sold exporters like Toyota Motor Corp <7203.T> on
worries that a stronger yen would hurt profits, while MSCI's
measure of other Asian stock markets <.MIAPJ0000PUS> shed 0.3
percent.
MSCI's main world equity index <.MIWD00000PUS> was down 0.3
percent.
Weakness in stocks gave government bonds a slightly bid tone
as investors sought the relatively safety of sovereign debt. The
March bund future <FGBLc1> climbed 18 ticks, while the benchmark
10-year yield <EU10YT=RR> slipped to 4.07 percent.
(Editing by Jon Boyle)
