GLOBAL MARKETS-Yen hits 4-1/2-year low vs dollar, oil and gold tumble
* Yen slides to 101.62 against dollar * Upbeat U.S. data, Japanese bond buys drive yen move * German Bunds fall as safe-haven demand dented * European shares hit five-year highs By Herbert Lash NEW YORK, May 10 (Reuters) - The yen slid to a 4-1/2-year low against the dollar on Friday, triggering a sell-off in oil and gold as well as safe-haven U.S. and German debt, after recent signs of strength in the U.S. labor market added to bullish sentiment on the dollar. Data on Japanese bond holdings showed that Japanese investors were buying more foreign assets, and the collapse in the yen reverberated throughout financial markets, which were buffeted by often conflicting signals about how investors view the economic outlook. the greenback rallied broadly as recent data showing improvement in the U.S. jobs market sparked speculation the Federal Reserve may scale back monetary easing. The firmer dollar pressured oil, as the strength of the dollar makes commodities more expensive for holders of other currencies. The fall in oil was intensified by rising supplies and doubts over the strength of China's economy. "There are two fundamental themes. The first is that despite signs of slower U.S. growth here in the second quarter, the U.S. labor market continues to improve," Marc Chandler, head of global currency strategy and Brown Brothers Harriman in New York. "The second is the news reported in Tokyo ... that Japanese investors turned buyers of foreign bonds," he said, calling it an important signal for the yen bears, who were already selling the Japanese currency on expectations that Japanese investors will sell as the Bank of Japan's stimulus measures displace them from the local bond market. The Japanese fell to 101.98 yen per dollar, the lowest since October 2008. The dollar was last at 101.62 yen, up 1.02 percent on the day. With the Japanese currency breaching the 100 level, analysts expect the yen to fall further. Some see the dollar rising to 105 yen this summer and to 110 by the end of the year. Overnight data showed that Japanese investors had bought 309.9 billion yen ($3.1 billion) in foreign bonds in the week through May 4 after purchasing 204.4 billion yen in the prior week, according to the Ministry of Finance. Equities in Europe closed higher, but Wall Street mostly retreated after early gains and a measure of global equity markets was lower. German Bunds slid to their lowest level in over a month as Bund futures, which hit a record high of 147.20 last week, fell more than a point to a low of 144.43 and were on course for their biggest one-week fall since March 10. Bund futures settled down 121 ticks at 144.66. The benchmark 10-year U.S. Treasury note was down 25/32 in price to yield 1.8982 percent. The slump in the Japanese currency was sparked by a drop in weekly U.S. jobless claims data on Thursday, which added to evidence of a rapidly improving employment market first seen in last week's nonfarm payrolls report. The move was given a further push by the data on Japanese investors' foreign bond purchases. The data confirmed widespread expectations that the Bank of Japan's aggressive stimulus plans would result in a massive flight of money out of the country in a search for higher-yielding investments. "We've had back-to-back good news in U.S. figures and you have to wind the clock back six to eight weeks to find the last time we had that," said Nick Parsons, head of market strategy at National Australia Bank. "Once we got through 100 (yen) and the Japanese bond buying data came out, that added fuel to the fire," he said. The yen's move came as finance ministers and central bankers of the Group of 7 countries gathered for a two-day meeting near London, to discuss ways to stimulate growth, with currency movements likely to be one of the main topics on the agenda. Wall Street stocks were mostly flat. A pair of strong corporate earnings helped the Nasdaq register a small advance. Nvidia Corp and Priceline.com Inc led the Nasdaq's rise a day reporting quarterly results. Both companies beat profit expectations, even as Priceline gave a second-quarter outlook that disappointed. "We're getting more constructive on the second half of the year as both the market and the economy are picking up," said Terry DuFrene, investment specialist for JP Morgan Private Bank in New Orleans. "While it has caught us by surprise how much markets have come up, and we might see a decline of 5 percent, we don't see any meaningful pullback ahead," DuFrene said. The Dow Jones industrial average was down 20.62 points, or 0.14 percent, at 15,062.00. The Standard & Poor's 500 Index was up 0.62 points, or 0.04 percent, at 1,627.29. The Nasdaq Composite Index was up 15.45 points, or 0.45 percent, at 3,424.62. MSCI's world equity index, which tracks stocks in 45 countries, was down 0.29 percent but was on course to end a third week of gains at a five-year high. The FTSEurofirst 300 index of leading European shares closed up 0.35 percent at 1,233.49. Brent crude oil was on the verge of tumbling below $102 a barrel, falling $1.87 to $102.60. U.S. crude eased $1.77 to $94.62 a barrel. Spot gold fell as low as $1,420.60 an ounce.
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