GLOBAL MARKETS-Yen drops on BoJ easing, U.S. shares at break-even

Thu Apr 4, 2013 1:29pm EDT

* Yen sinks 3.3 pct vs dollar on bold Bank of Japan easing
    * Dow, S&P 500 pare gains to trade flat; Europe closes down
    * Oil falls on U.S. new jobless claims, bonds rally


    By Herbert Lash
    NEW YORK, April 4 (Reuters) - The yen sank on Thursday after
the Bank of Japan unveiled a bold plan to pump money into the
economy, pushing the dollar higher,  while U.S. stocks were
little changed as investor reassurances over central bank
policies were offset by soft economic data.
    The number of Americans filing new claims for unemployment
benefits hit a four-month high last week, the Labor Department
reported, a potential sign the U.S. labor market recovery lost
steam in March. 
    The BoJ surprised markets when it unleashed the world's most
intense burst of monetary stimulus, planning to nearly double
the monetary base to 270 trillion yen ($2.9 trillion) by the end
of 2014, in a shock therapy to end two decades of stagnation.
    The dollar and euro soared more than 3 percent against the
yen in their biggest one-day moves since 2008 after the BoJ took
the action to fight deflation.
    "The Japanese news was significant to show that there is
going to continue to be, on a global basis, easy money, which
supports stocks," said Rick Meckler, president of hedge fund
LibertyView Capital Management LLC in Jersey City, New Jersey.
    The dollar rose as high as 96.41 yen, approaching a
3-1/2-year peak of 96.71 set on March 12. It was last trading at
96.16 yen, up 3.35 percent on the day and on track for its best
day since October 2008. 
    The euro soared 3.62 percent to 123.84 yen, the
biggest one-day move since November 2008.
    The Dow Jones industrial average was down 0.76 point,
or 0.01 percent, at 14,549.59. The Standard & Poor's 500 Index
 was down 0.02 point, or 0.00 percent, at 1,553.67. The
Nasdaq Composite Index was down 7.37 points, or 0.23
percent, at 3,211.24. 
    Investors are skittish after several weak readings on the
economy this week," said Jack DeGan, chief investment officer of
Harbor Advisory. 
    "There is a fear of this being the start of a 'spring
swoon'," DeGan said. 
    "I don't think that is the case, but until we get a couple
of real inputs that the economy is improving, the rally is
likely to stall considering how far we've come this year."
    On Wednesday, data on private-sector hiring disappointed,
spurring concerns about Friday's government payrolls report,
which is expected to show that 200,000 jobs were added in March.
 
    Peter Cardillo, chief market economist at Rockwell Global
Capital in New York, said the rise in jobless claims indicated
the sequester was taking a toll on the labor market.
    "The economy is slowing, the job market is slowing, and the
Fed is not changing its policy," Cardillo said.
    Initial claims for state unemployment benefits increased
28,000 to a seasonally adjusted 385,000 last week, the highest
level since November, the Labor Department said.
    European shares fell sharply as traders, unhappy by the lack
of fresh economic stimulus measures from the European Central
Bank, took profit on recent sectoral outperformers.
    The ECB kept its interest rates on hold and did not unveil
any new initiative, such as special credit schemes for small
enterprises, which some traders had been hoping for after recent
weak economic data. 
    The pan-European FTSEurofirst 300 index extended
losses after ECB President Mario Draghi spoke in the afternoon,
to end 1.1 percent lower at 1,180.65.
    MSCI's world equity index slipped 0.44
percent to 356.10.
    U.S. Treasury debt prices rose, pushing yields to near
3-1/2-month lows, after the jobless claims data suggested that
the government's monthly employment report due out on Friday
could show the labor market lost some steam in March, an outcome
that would favor safe-haven U.S. debt.
    The benchmark 10-year U.S. Treasury note was up
15/32 in price to yield 1.7625 percent.
    Crude oil futures dropped as the increase in U.S. claims for
unemployment benefits heightened concerns about economic growth
in the world's top oil consumer.
    Brent futures for May delivery fell $1.36 to $105.75
a barrel.
    U.S. crude slumped $1.76 to $92.69 a barrel.
    Spot gold prices fell $8.39 to $1,548.90 an ounce.
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