SYDNEY, May 2 (Reuters) - The dollar rebounded from
three-year lows and U.S. crude slid more than 1 percent on
Monday on the back of news that a U.S.-led operation killed
Osama bin Laden in Pakistan.
U.S. stock index futures <SPc1> added to gains, while U.S.
Treasury yields rose across the curve after U.S. officials said
the body of Al Queda's elusive leader has been recovered by U.S.
authorities, triggering a []
"By lowering national security risks overall, this is likely
to bolster equity markets and lower US Treasury prices in a
reverse flight to quality movement," said Mohamed El-Erian,
Chief Executive Officer and Co-Chief Investment Officer at
PIMCO, which oversees $1.2 trillion assets.
"Oil markets are likely to be the most volatile given their
higher sensitivity to the tug of war between lower risk overall
and the possibility of isolated disturbances in some parts of
the Middle East and central Asia," he said.
U.S. crude <CLc1> fell 1.3 percent to $112.39, while U.S.
stock index futures <SPc1> rose 0.9 percent.
U.S. Treasuries fell, pushing yields higher across the
curve. The 10-year yield climbed 2.4 basis points to
3.314 percent.
Earlier, a 10 percent slide in silver highlighted worries
that other overbought assets may be vulnerable to sudden
sell-offs.
Financial markets in China, Hong Kong, Singapore, Malaysia
and Thailand were all shut on Monday for public holidays, a
factor seen contributing to thin trading conditions that could
exaggerate price action.
Japan's Nikkei average rose 1.0 percent, South
Korea's KOSPI put on 0.9 percent, but Australia's
S&P/ASX 200 index slipped 0.5 percent.
MSCI's gauge of Asian stocks excluding Japan
struggled to make further gains, having reached a three-year
peak last week. It was up 0.08 percent at 506.62.
Silver skidded about 10 percent to a low of $42.58 ,
well off a record high of $49.51 set on Thursday. Gold fell to
$1,546 from an all-time high of $1,575.79.
"If adjustment is confined to just silver, it won't be a big
deal," said Koji Fukaya, chief strategist at Credit Suisse in
Tokyo.
"But if this moves spills over to other commodities, that
could certainly hurt commodity currencies, such as the
Australian dollar and the Canadian dollar. And we could see a
rebound in the U.S. dollar."
DOLLAR DOLDRUMS
The U.S. dollar fell to a fresh three-year low against a
bakset of major currencies as investors sought higher-yielding
assets with the U.S. central bank in no hurry to tighten its
ultra-loose monetary policy.
This has helped the high-flying Australian dollar
extend gains to a fresh 29-year high above $1.1000. The euro
held near a 16-month high around $1.4881 set last week.
With both the Federal Reserve and Bank of Japan maintaining
ultra-loose monetary policies, investors have been seeking
higher yielding assets in many fast-growing emerging markets in
Asia.
This has prompted many Asian authorities to tighten policy
as inflationary pressure grows. Data on Sunday showed China's
policy actions to rein in prices appeared to be taking effect,
with manufacturing growth slowing in April. []
(Reporting by Ian Chua in Sydney and Jennifer Ablan in New
York; Editing by Richard Borsuk)
