* Dollar eases from a 2-1/2-month high vs euro ahead of Fed
* Global stocks, gold prices and govt bonds mostly steady
* Banks gain on Basel grace period
By Dominic Lau
LONDON, Dec 16 (Reuters) - The dollar eased from a 2-1/2
month high versus the euro on Wednesday, while global equities,
gold and government bonds were steady as investors waited for
more clues on when the Federal Reserve might start tightening.
Banking shares, however, were in demand after sources said
global regulators would give lenders a grace period before
forcing them to implement stricter capital rules, easing concern
banks would need to issue massive amounts of shares in the near
future. []
Crude prices <CLc1> held at around $71 a barrel after
snapping a nine-day losing streak a day earlier.
A rise in U.S. wholesale prices last month, which pushed up
Treasury yields overnight, prompted speculation the Fed may have
to account for these pressures in its post-meeting statement,
though Fed Chairman Ben Bernanke said in a letter to a
congressman that inflation is not a problem. []
The Fed is expected to stick to its super-loose monetary
policy stance as high unemployment constrains policymakers'
enthusiasm about the economy's recent improvement.
The dollar <.DXY> flat against a basket of major currencies,
with the euro up 0.1 percent at $1.455. The U.S. currency was up
0.1 percent against the yen at 89.81.
"The dollar has been moving higher on some expectations that
the Fed might change its statement to suggest more rate rises
over the next 12 months," said Marcus Hettinger, global currency
strategist at Credit Suisse in Zurich.
"The risk is that the Fed will stick to its usual statement,
which may push the dollar lower later today."
With the global economy gradually recovering from the worst
slump in generations, investors are carefully weighing when
central banks and governments will begin withdrawing massive
emergency stimulus measures, and if they can unwind such
policies without disrupting financial markets.
A top Australian central banker stunned markets on Wednesday
by saying interest rates there were back to normal, leading
investors to trim bets that the Reserve Bank of Australia would
raise rates a fourth consecutive time in February.
[]
Global equities measured in the MSCI All-Country World Index
<.MIWD00000PUS> ticked up 0.1 percent. In Europe, the
FTSEurofirst 300 <> index put on 0.4 percent and the DJ
STOXX European banks index <.SX7P> rose 0.9 percent.
Overnight, Tokyo's Nikkei average <> advanced 0.9
percent to hit its highest close in seven weeks, led by bank
shares.
"We are overweight equities, but are reducing beta and
cyclical exposure. Headwinds for equities are rising but are not
sufficient to kill the rally yet," Morgan Stanley said in a
report.
"The year (2010) will start strong -- we see 10-15 percent
upside in equities from here -- but think that markets will have
overshot fair value. We expect only single-digit return for
global developed equities for the full year, but the risks are
slanted to a worse outcome."
The MSCI All-Country World Index has rallied more than 70
percent since hitting a low in early March, and is up more than
30 percent for the year.
Gold prices <XAU=> were also flat at $1,124.20 an ounce.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
down 2 basis points at 3.578 percent, while those on 10-year
Bunds <EU10YT=RR> were down 1 basis point at 3.227 percent.
(Additional reporting by Naomi Tajitsu in London and Kevin
Plumberg in Hong Kong; editing by Stephen Nisbet)
