By Jeremy Gaunt, European Investment Correspondent
LONDON, Aug 12 (Reuters) - Worries about a slowing global
economy pushed the dollar to six-month highs against the euro
and other major currencies on Tuesday, and prompted more selling
of key commodities such as gold and oil.
Shares were down globally. UBS <UBSN.VX> bank reported
worse-than-expected losses as a result of the credit crisis.
The dollar index <.DXY>, which tracks the U.S. currency
against a basket of counterparts, rose to 76.616, its highest
level since February and the eighth straight trading day of
gains.
The euro <EUR=> sank to a six-month low against the dollar
and was trading around $1.4877. Britain's pound slid to a
21-month trough just above $1.90.
Investors have been unwinding currency trades against the
dollar, boosting the greenback as evidence grows that the world
economy is slowing fast and perhaps may be doing so more than
expected.
"The deteriorating economic outlook for the euro zone and
elsewhere is now having an impact after the market had become
used to weakness in the U.S. economy," said Kosuke Hanao, head
of forex sales at HSBC in Tokyo.
The same pressures have been weakening once high-flying
commodities, which often move in contrary directions to the
dollar as an inflation hedge.
Oil fell around $1 a barrel despite concerns over supply
disruptions stemming from the Russia-Georgia clash.
U.S. crude <CLc1> fell 90 cents to $113.50 a barrel,
hovering at its lowest since early May. The contract has fallen
more than $30, or around 23 percent, from the record above $147
a barrel touched on July 11.
Gold <XAU=> tumbled to its weakest in almost eight months
before recovering slightly to around $808 an ounce. Platinum and
silver also dropped to their lowest level since December.
STOCKS LOWER
Stocks were generally lower. The FTSEurofirst 300 <>
was off 0.5 percent, hit by falling energy stocks.
UBS reversed early losses after it unveiled a plan to break
up its business into three autonomous units.
The bank, which has been Europe's hardest-hit victim of the
credit crunch so far, earlier said its second-quarter net loss
amounted to 358 million Swiss francs ($332.4 million), compared
with forecasts of a loss of 273 million francs in a Reuters
poll.
"It continues with the theme we've been seeing from bank
executives, where they're talking about no signs of real
improvement in terms of the economic and financial trends," said
Barclays Stockbrokers strategist Henk Potts.
Japan's Nikkei <> earlier closed down 127.31 points, or
around 1 percent, to end at 13,303.60, after rising 2 percent
the previous day. The broader Topix <> shed 0.7 percent to
1,271.42.
Euro zone government bond prices gained. Two-year yields
<EU2YT=RR> were 0.4 basis points lower at 4.063 percent, while
10-year yields <EU10YT=RR> were 0.3 basis points lower at 4.236
percent.
