(Updates prices, adds U.S. data, comments)
By Ian Chua
LONDON, Feb 28 (Reuters) - Further signs of weakness in the
U.S. economy sent the dollar to a fresh low versus a basket of
currencies on Thursday and kept European and U.S. stocks under
pressure.
Following a recent string of negative U.S. economic data,
figures on Thursday showed a sharp jump in weekly jobless claims
and a weaker-than-expected reading of fourth quarter economic
growth.
"Well just when you think it can't get any worse, it does,"
said Shaun Osborne, senior currency strategist, at TD
Securities.
"We expected an upward revision on GDP and didn't get it, but
the concerns about the jobless claims are even bigger because
it looks like the labor market is showing some pretty evident
softening."
Fretting about the health of the U.S. economy, European
stock markets extended losses with the FTSEurofirst 300 <>
index of top European shares falling 1.4 percent.
Germany's DAX <> and London's FTSE <> both also
shed more than 1 percent.
"European equities are vulnerable to a slowdown in the
(United) States spreading to Europe, exacerbated by the euro's
strength and on a currency-adjusted basis, they don't look
massively attractive," said Andrew Bell, strategist at Rensburg
Sheppards Investment Management.
Earlier, Japan's Nikkei <> lost 0.8 percent, while
MSCI's measure of other Asian stock markets <.MIAPJ0000PUS>
edged 0.2 percent lower.
MSCI's main world equity index <.MIWD00000PUS> slipped 0.4
percent.
Major U.S. stock indexes <.SPX><><> were down
between 0.5 percent and 0.7 percent in early trade.
Weakness in stocks gave government bonds a bid tone as
investors sought the relatively safety of sovereign debt.
The March bund future <FGBLc1> climbed 54 ticks, while the
benchmark 10-year yield <EU10YT=RR> slipped to 4.03 percent.
U.S. 10-year yield <US10YT=RR> fell to near one-week lows of
3.73 percent.
NEW LOWS FOR DOLLAR
The dollar index <.DXY>, which tracks the greenback's
performance against six major currencies, fell to a fresh record
low of 74.033 in the wake of the latest U.S. data.
The euro hit a new all-time high of $1.5152, while the
dollar slid below 106 yen <JPY=> to one-month lows.
On Wednesday, Bernanke said it was "important to recognise
that downside risks to growth remains", signalling a readiness
by the central bank to lower rates to prevent further damage to
the economy. []
Bernanke will continue his testimony later on Thursday, this
time to the Senate Banking Committee.
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 have started to discount the risk of a bigger 75 point cut.
<FEDWATCH>
U.S. crude oil <CLc1> rose back above $100 a barrel after
traders said supply was cut in Nigeria, while gold <XAU=> edged
back to $960.00, within easy reach of the record high of $964.70
set in the previous session.
