Britain's leading shares index fell sharply in late trade on Thursday as comments by the European Central Bank and increased economic fears weighed on banks, while the Bank of England held borrowing rates steady. The FTSE 100 was down 137.6 points, or 2.5 percent at 5,362.1 -- its biggest daily fall since July 11 -- after earlier touching a high of 5,541.7 in the session.
Japan's Nikkei average fell 1 percent to a five-month closing low on Thursday, dragged down by Tokyo Electron Ltd and other tech shares as worries grew about tech spending in the face of increasing economic gloom. Shares of glass makers like Nippon Electric Glass tumbled after rival Corning Inc cut its outlook while shippers lost ground on a drop in a major freight index. The benchmark Nikkei ended down 131.93 points at 12,557.66, the lowest close since March 31. The broader Topix fell 1.6 percent to 1,201.65.
Australian shares are expected to open down as Wall Street stocks had their worst day in more than two months. The share index futures fell 152 points, to 4,849, at a 130.5 point discount to the close in the underlying index on Thursday at 4,979.5. Resource firms could come under more pressure after commodities prices fell.
The dollar rallied on Thursday to its highest level against the euro this year after the European Central Bank cut its growth outlook for the euro zone, stoking speculation of lower interest rates in the region. The euro deepened losses after the chairman of euro zone finance ministers, Jean-Claude Juncker, said the single currency was still effectively overvalued despite its recent fall. Euro zone economic uncertainty was "particularly high," the European Central Bank president, Jean-Claude Trichet, said after the ECB left its interest rates at 4.25 percent on Thursday. But Trichet cautioned that inflation remains high and the risks are to the upside. In late afternoon trading in New York, the euro tumbled more than 1 percent on the day to trade at $1.4332, after falling as low as $1.4321, its lowest since December 2007, according to Reuters data. The dollar, however, fell 1.1 percent against the yen to trade at 107.12, hurt by sharp losses on Wall Street.
U.S. Treasury debt prices rallied on Thursday, taking benchmark yields to four-month lows as plunging stocks stoked a safety bid for government debt on more signs of deterioration in the labor market. Data released on Thursday showed a surprise rise in weekly jobless claims, a bigger-than-forecast contraction in private employment in August, and continued shrinkage of employment activity in the services sector last month. Thursday's gloomy news on the labor market skewed risks to the downside on forecasts for Friday's all-important data on August nonfarm payrolls, bond analysts said. The benchmark 10-year note's price, which moves inversely to its yield, rose 17/32 for a yield of 3.64 percent, the lowest since mid-April, from 3.70 percent late on Wednesday. Two-year Treasury notes rose 4/32 in price for a yield of 2.20 percent, the lowest yield since early May, from 2.27 percent late Wednesday. The 30-year Treasury bond rose 25/32 in price for a yield of 4.27 percent, the lowest yield level since late March and versus 4.32 percent late Wednesday.
December gold settled $5.00 lower at $803.20 an ounce on the COMEX division of the New York Mercantile Exchange. December set a narrow range between $798.10 and $819.50 an ounce. COMEX put final gold volume at 137,524 lots. Options tally came to 7,894 lots. Gold was pulled lower when the dollar rose against the euro following a stronger-than-forecast U.S. service sector report - traders. But gold's losses were limited, with some options players anticipating a return to higher levels after steep declines earlier this week-brokers. A dip in crude oil prices also weighed on gold prices as some players unwound their inflation plays-traders. Spot gold, at $796.15/797.75 an ounce, was slightly lower than $800.05/801.65 an ounce at Wednesday's close. London's afternoon gold fix was up at $805.75 an ounce.
Copper fell on Thursday, reversing earlier gains, in erratic trade as the metal continued to take its cue from the currency markets. Bargain hunting earlier lifted the metal 1 percent to its highest level in almost a week, before the stronger dollar pushed copper lower. The strengthening U.S. currency also put pressure on tin, which was earlier boosted by a sharp rise in cancelled warrants -- material earmarked for delivery -- and LME inventories falling to near three-year lows. Copper for three-months delivery on the London Metal Exchange rose as high as $7,440 per tonne before closing at $7,226 per tonne, versus Wednesday's $7,345. Aluminium closed up $1.50 at $2,677 per tonne. Several analysts cite structural power problems in China as likely to lead to a tighter aluminium market. However, stocks are around 1.17 million tonnes -- the highest since April 2004.
U.S. crude oil futures ended more than $1 lower on Thursday, despite U.S. government data showing a surprise drawdown in crude stocks and even with gasoline supplies dropping for the sixth week in a row. Prices fell, with pressure coming from the dollar, which rallied to its highest level against the euro this year after the European Central Bank cut its growth outlook for the euro zone. Gasoline futures slumped and heating oil futures also fell steeply, even though the data showed distillate supplies unexpectedly fell, instead of rising as predicted. On the New York Mercantile Exchange, October crude settled down $1.46, or 1.34 percent, at $107.89 a barrel, trading from $106.52 to $110.60.
Source: Reuters
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