GLOBAL MARKETS-Yen dives as BOJ mulls more easing, Wall St lower
* Yen tumbles as BOJ considers more easing -sources * U.S. stocks steady on robust economic data * Euro, shares dip after mixed European data * Sterling at trade-weighted five-year high By Barani Krishnan NEW YORK, Dec 2 (Reuters) - The yen tumbled on Monday after sources told Reuters the Bank of Japan was considering expanding its already massive economic stimulus, while U.S. stocks slipped after eight straight weeks of gains. Sterling hit a five-year high on signs the British economy was outpacing its European neighbors. U.S. Treasuries yields also rose as bond investors turned cautious ahead of a data-heavy week that will culminate in Friday's November U.S. jobs report, which markets are anticipating for guidance on the Federal Reserve's stimulus. "It's all defense into Friday's number," said Tom Tucci, head of Treasuries trading at CIBC in New York. Gold fell nearly 2 percent to below $1,230 an ounce, undermined by concerns that a stronger U.S. economy will lead the Fed to reduce its stimulus. Gold has lost around a quarter of its value so far this year, on course for its first annual loss in 13 years. The benchmark 10-year U.S. Treasury note was down 15/32, its yield at 2.7933 percent. On Wall Street, the Dow Jones industrial average was off 30.44 points, or 0.19 percent, at 16,055.97. The Standard & Poor's 500 Index was up 0.28 points, or 0.02 percent, at 1,806.09. The Nasdaq Composite Index was down 0.58 points, or 0.01 percent, at 4,059.31. The yen hit a more than six-month low versus the dollar and weakened toward a five-year trough against the euro after sources told Reuters that the Bank of Japan was looking to go beyond its $70 billion-a-month bond-buying operation. The dollar rose as high as 103.03 yen, the strongest since May 23, according to Reuters data, and was last up 0.6 percent at 102.98 yen. The euro rose 0.3 percent to 139.49 yen. Against the dollar, the euro shed 0.3 percent to $1.3543 , retreating from Friday's one-month high of $1.3621. The BOJ's options include major purchases of stock market linked funds or other assets riskier than Japanese government bonds, according to officials briefed on the process. "There's no sense that further stimulus is imminent," said one of the officials, adding that the central bank's inflation target is still a long way off. "There's no harm in thinking about options." Markets are figuring on further stimulus from the BOJ sometime next year on concerns that the economy and inflation will lose some momentum. BOJ Governor Haruhiko Kuroda stressed on Monday that Japan was on course to secure sustainable inflation of 2 percent in two years, a target set when the central bank announced a massive burst of money printing in April to double base-money supply. The U.S. economic outlook brightened after a gauge for factory activity hit a 2-1/2-year high in November and construction spending increased solidly in October. The Institute for Supply Management said its index of national factory activity rose to 57.3 last month -- the highest reading since April 2011. The index was at 56.4 in October. November was the sixth consecutive month of faster growth in the goods-producing sector since a contraction in May. A separate report from the Commerce Department showed construction spending increased 0.8 percent to the highest level since May 2009. Economists polled by Reuters had expected an increase of 0.4 percent. Financial data firm Markit, meanwhile, said its manufacturing index hit 10-month highs in November. Sterling surged to a five-year high after data showed UK manufacturing grew at its strongest rate in almost three years, adding to recent talk that the Bank of England may not be able to hold off from raising interest rates next year. At the same, euro zone stocks were sent stumbling by disappointing equivalent figures from France and Spain that underscored the ongoing split in fortunes between them and euro zone powerhouse Germany. "You have seen the PMIs and some are better than others, but what is does seem to point to is a diverging European economy, and that is a bit of a worry," said Michael Hewson, senior markets analyst at CMC Markets in London. Britain's FTSE 100 was down 0.6 percent. Milan's main index fell 1 percent and Madrid dropped 0.8 percent. Debt and currency markets told a similar story. Bonds from core euro zone countries Germany and the Netherlands, as well as France, Italy and Spain all lost ground, as did the euro, which hit an 11-month low vs the pound. The European Central Bank meets on Thursday, but having surprised markets by cutting rates last month, the ECB is expected to sit on its hands at this meeting.
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