By Natsuko Waki
LONDON, April 10 (Reuters) - European and major Asian stocks
edged lower on Thursday and the dollar fell on worries about the
outlook for the global economy and corporate profits.
Oil holding near this week's historic highs highlighted
inflation pressures as the European Central Bank and Bank of
England met to decide whether to change interest rates.
However, sterling hit a fresh 11-year low on a
trade-weighted basis and tumbled to record troughs versus the
euro as this week's weak housing and consumer morale surveys
cemented expectations the UK central bank would announce a cut
at 1100 GMT.
Optimism that the worst of the credit crisis may be over,
which pushed world stocks to one-month highs this week, is
tapering off as some firms announced soft first-quarter earnings
and the IMF gave a grim assessment on bank-sector losses and
global economy.
A shift in investor focus back to economic fundamentals also
overshadowed expectations that Group of Seven rich nations would
unveil a drastic plan to help stabilise banks and financial
markets at their meeting this weekend.
"Risk aversion picked up ahead of the G7 as concerns about
U.S. growth and worries about first quarter results have seen
the dollar come under pressure again," said Antje Praefcke,
currency strategist at Commerzbank in Frankfurt.
The FTSEurofirst 300 index <> was down 0.2 percent
while MSCI main world equity index <.MIWD00000PUS> was steady on
the day. Tokyo stocks <> fell almost 1.3 percent while
Singapore and Sydney shares also eased.
The IMF cut its 2008 world growth forecast this week and
said losses from the credit crisis would approach $1 trillion.
The dollar <.DXY> was down 0.1 percent against a basket of
currencies while sterling had fallen as far as 80.26 pence per
euro <EURGBP=>. On the trade-weighted index, sterling is at its
weakest since 1996.
The BoE is expected to cut rates by a quarter point to 5.0
percent [].
"A rate cut's fine, but we do need to know that we're going
to do more in terms of liquidity problems because ... cutting
interest rates without assisting further in the liquidity crisis
is pointless," said David Buik of spread better Cantor Index.
The ECB announces its decision at 1145 GMT, but its firm
focus on inflation -- at a record 3.5 percent -- is likely to
keep rates on hold at 4 percent.
"People just want to have a feeling of whether the
hardliners in the ECB do get a touch softer," said Heino Ruland,
strategist at FrankfurtFinanz in Frankfurt.
Emerging sovereign spreads <11EMJ> tightened 1 basis point
while emerging stocks <.MSCIEF> were up half a percent.
The June Bund future <FGBLM8> rose 33 ticks, garnering
safe-haven flows.
U.S. light crude <CLc1> was down 0.15 percent at $110.71 a
barrel, not far below Wednesday's record high of $112.21.
Gold <XAU=> slipped to $929.10 an ounce as investors
remained nervous over how and when the IMF, the world's third
largest gold holder, would sell.
(Additional reporting by Simon Falush, Amanda Cooper and
Rebekah Curtis; Editing by Ruth Pitchford)
