GLOBAL MARKETS-Dollar slides on US Worry, stocks steady

The euro rose to a record high against the dollar Friday on worries about the U.S. economy but Asian stocks steadied in holiday-thinned trading as buyers warily emerged from a six-session losing streak.

European shares are expected to open a touch firmer, although further direction will depend on U.S. markets, which will reopen for an abbreviated session after the Thanksgiving holiday.

The euro, which has risen 13 percent against the dollar this year, tested the pyschologically important $1.50 level. That kept oil within striking distance of $100 a barrel, which in turn helped lift gold towards a one-week high of $810 an ounce.
Trading was light and erratic with holidays in Japan and the United States giving investors little in the way of fresh leads.

By 0611 GMT, MSCI's measure of Asia Pacific stocks excluding Japan was little changed, steadying after falling in the past six sessions. However, it remained on track for a fourth straight week of decline.

"In the last week, the amount of shorting in the market is very, very high ... so if people just square up, that means that markets have to rise. I think there is a little bit of that going on today," said Tim Rocks, regional equity strategist at Macquarie Securities.
"It tells you that generally, you're towards the end of this period of panic. But having said that, I don't think those issues are over at the moment."

Asian stocks had been caught in a global downdraft sparked by worries about the financial sector after many major banks such as Citigroup wrote off billions of dollars in credit-related losses.

The MSCI index has lost 14 percent since hitting a record high on Nov. 1, but was still up 27 percent this year, four times the gains for MSCI's main global stock index
Worries that a deep U.S. housing slump and tight credit would hit consumers have also cast a shadow over the health of the U.S. economy, Asia's top export destination.
All eyes are on retailers the day after Thanksgiving holiday which marks the start of the major U.S. holiday shopping season, to gauge the health of U.S. consumers.

DOLLAR SAGS

Investors dumped the dollar, betting the U.S. Federal Reserve will have to cut interest rates again next month to help shore up the U.S. economy.

A report on Wednesday from the Organisation for Economic Co-operation and Development that said overall losses caused by the U.S. mortgage market crisis could feasibly hit $300 billion also weighed on the dollar.

"We're seeing another round of risk aversion and worries that we could see more financial institutions in the U.S. coming under stress," said Sharada Selvanathan, a currency strategist at BNP Paribas in Hong Kong.

The dollar index, which tracks the greenback against a basket of major currencies, hit an all-time low of 74.484, taking year-to-date losses to 11 percent. It also weakened against the yen slipping to a fresh 2-½ year low near 107.5 yen.

The euro rose to a record high around $1.4970 but slipped below 161 yen
The weak dollar supported oil, with London Brent crude briefly rising above $95 a barrel.

MARKETS MIXED

Among major regional stock markets, Hong Kong's Hang Seng Index gained 1.2 percent, Singapore's Straits Times and Australia's S&P/ASX 200 index were flat but South Korea's KOSPI reversed early gains to end 1.5 percent lower.

Financial stocks, hardest hit by fears that ongoing credit problems will further hurt their earnings, were mixed with investors buying laggard South Korean banks, while selling their Australian counterparts.

South Korea's top lender Kookmin Bank added 0.2 percent, Woori Finance Holdings climbed 2.1 percent, but Australia's Commonwealth Bank and Westpac Banking Group shed more than 1 percent each.

Some resource stocks were also under pressure amid expectations of further weakness in industrial metals prices with investors worried that slowing global growth may crimp demand.

Mining giant BHP Billiton dipped 0.4 percent and Hunan Nonferrous Metals shed 4.4 percent.

"Clearly, investment banks are out of favour with investors worldwide while the prospect of slower global growth has weighed on high-flying mining stocks," said Craig James, chief equities economist at CommSec in Sydney.

Editing by Lincoln Feast
Source: http://www.guardian.co.uk/feedarticle?id=7097861