* Dollar drops vs euro, yen and Swiss franc
* Treasuries rise on CPI, weak U.S. housing data
* LCH doubles margin requirement on Irish gov't bonds
(Adds close of European markets)
By Jennifer Ablan
NEW YORK, Nov 17 (Reuters) - The dollar fell against the
euro, yen and Swiss franc on Wednesday and U.S. stocks wavered
between gains and losses as the lack of a solution to Ireland's
debt crisis weighed on markets.
Treasuries prices rose after U.S. government figures showed
the lowest core annual inflation rate on record and a steep
drop in housing starts from already depressed levels. The data
supported the case for the Federal Reserve to buy government
bonds to stimulate the economy.
In New York trade, the euro rose as high as $1.3539 and
last traded at $1.3547, up 0.41 percent from the prior close
<EUR=>. The dollar was down 0.11 percent at 83.17 yen <JPY=>
and last traded at 0.9895 Swiss francs <CHF=>, down 0.6
percent. Both were the session lows.
Euro zone finance ministers have agreed to lay the
groundwork for bailing out Ireland's banking sector with the
IMF. Dublin has yet to decide whether to request the aid.
The nervousness grew after European clearing house LCH.
Clearnet doubled its margin requirement on Irish government
bonds to 30 percent of net positions, citing higher Irish
yields over German benchmarks.
"If we get a resolution to Ireland's problems, you could
see the euro bounce," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington. "The overall bias
is to the downside, given uncertainty about not just Ireland
but Portugal and Spain."
The euro briefly gained after a report showed U.S. consumer
prices rose less than expected in October and the increase in
the year-on-year core rate was the smallest on record. For
details, see []. But the single currency has lost
3.2 percent this month as investors cut long positions as
peripheral debt worries mount.
World markets were also hit by interest rate concerns
involving China, the global growth engine. Premier Wen Jiabao
said his government was preparing steps to tame price rises,
fueling expectations China will intensify tightening policies,
possibly as soon as Friday.
"Chinese rate hike prospects are one thing (affecting
markets). There is also the prospect of tighter measures on
inflows in Asia, especially Korea," said Gaelle Blanchard,
emerging markets strategist at Societe Generale.
Chinese shares closed down 1.9 percent, sending wider Asian
stocks to their lowest levels in four weeks and hitting other
countries that depend on China's growth, such as Australia.
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U.S. Treasury debt prices were higher on weak consumer
price and housing data. Starts on new homes slumped to the
lowest in 1-1/2 years in October, the government said.
The benchmark 10-year Treasury note <US10YT=RR> was up
4/32, with the yield at 2.83 percent. The 2-year U.S. Treasury
note <US2YT=RR> was up /32, with the yield at 0.49 percent. The
30-year U.S. Treasury bond <US30YT=RR> was up 14/32, with the
yield at 4.25 percent.
On Wall Street, major stock indices were up a smidgen.
The Dow Jones industrial average <> was up 5.45 points,
or 0.05 percent, at 11,028.95. The Standard & Poor's 500 Index
<.SPX> was up 3.10 points, or 0.26 percent, at 1,181.44. The
Nasdaq Composite Index <> was up 11.93 points, or 0.48
percent, at 2,481.77. down 3.93 points, or 0.04 percent, at
11,019.57.
For its part, MSCI's all-country world stock index
<.MIWD00000PUS> rose 0.38 percent while the FTSEurofirst 300
<> index of leading European shares advanced by 0.54
percent to 1,092.46.
In energy and commodities prices, U.S. light sweet crude
oil <CLc1> fell $1.38, or 1.68 percent, to $80.96 per barrel,
and spot gold prices <XAU=> fell 31 cents, or 0.02 percent, to
$1340.10. The Reuters/Jefferies CRB Index <.CRB> was down 0.89
points, or 0.3 percent, at 295.33.
(Additional reporting by Wanfeng Zhou and Nick Olivari;
Editing by Kenneth Barry and Andrew Hay)
