(Updates prices, adds comments)
By Ian Chua
LONDON, Feb 22 (Reuters) - Recent signs that the world's
biggest economy may be sliding into recession unsettled European
and Asian stocks on Friday, and helped push the dollar to a near
three-week low versus a basket of currencies.
Adding to worries was news that thousands of Turkish troops
have crossed into northern Iraq in their hunt for Kurdish PKK
guerrillas -- the first major incursion in a decade that is set
to heat up the geopolitical scene. []
U.S. data on Thursday showing mid-Atlantic factory
production slumped to its lowest level since the 2001 recession,
and an index of future U.S. economic activity pointed to even
tougher times ahead had sparked a global selloff in stocks.
[]
After the previous session's sharp fall though, Wall Street
looked set for a steadier start on Friday with U.S. stock
futures <NDc1><SPc1><DJc1> trading just a touch lower.
The FTSEurofirst 300 index <> of top European shares
fell 0.4 percent while London's FTSE <> shed 0.2 percent.
Germany's DAX <> was 1.2 percent lower, further weighed by
disappointing profits from the country's second-largest utility
RWE <RWEG.DE>.
"The problem is you have a slowdown of the economy and in
addition rising oil prices," said Achim Matzke, European stock
indexes analyst at Commerzbank.
"That's why equity markets are cautious. From a technical
point of view the European market is in a bear market."
Earlier, Japan's Nikkei <> lost 1.4 percent, while
MSCI's measure of other Asian stock markets <.MIAPJ0000PUS> slid
0.6 percent. MSCI's main world equity index <.MIWD00000PUS> was
0.1 percent lower.
With no major U.S. data due on Friday, analysts said the
near-term outlook for markets doesn't look promising.
"Investors will begin next week with the awful February
Philly Fed survey fresh in mind; and amidst widespread fears
that a U.S. recession is now a fait accompli, it may take a
succession of positive figures for any genuine optimism to
resurface," said Neil Mellor at Bank of New York Mellon.
EURO ZONE DATA DENTS BONDS
Safe-haven government bonds, which normally benefit from
heightened risk aversion, failed to gain much traction with
European bonds subdued after a report showed euro zone services
growth unexpectedly bounced back in Feburary from a 4-1/2 year
low. []
The 10-year Bund yield <EU10YT=RR> was little changed near
4.0 percent, and the 2-year yield <EU2YT=RR> was flat at 3.326
percent.
The euro benefited from the data, which challenged the case
for an imminent rate cut by the European Central Bank, and rose
to a three-week high of $1.4853 <EUR=>.
Against a basket of currencies, the embattled dollar slipped
0.2 percent <.DXY> to a near three-week low of 75.472.
"The market today is focused on dollar selling," said Derek
Halpenny, senior currency economist at BTM UFJ.
The ECB has held its benchmark rate at 4 percent since last
June while the Fed has slashed its key rate to 3 percent. The
U.S. central bank is widely expected to take rates down to 2.5
percent next month. <FEDWATCH>
Seen as a safe haven in times of market woes, gold <XAU=>
edged up to $945.20 an ounce, not far off its all-time high of
$953.60 set a day earlier.
Dealers said gold's uptrend remained intact with the
prospect of more U.S. interest rate cuts supporting its appeal
as an alternative investment.
U.S. crude <CLc1> reversed early losses to be up 30 cents at
$98.53, but remained some way off a record high above $101 a
barrel set earlier in the week.
(Editing by David Christian-Edwards)
