GLOBAL MARKETS-Wall St gets post-selloff bounce; dollar and euro sag vs yen

Tue Apr 8, 2014 1:45pm EDT

* Dollar drops against yen as BoJ says more stimulus not needed

* Wall Street rebounds, led by social media and Internet shares

* U.S. Treasuries prices flat ahead of debt auction

* Oil up more than $1 a barrel (Updates with U.S. midday trading)

By Michael Connor

NEW YORK, April 8 (Reuters) - The dollar and euro fell sharply against the yen on Tuesday as hopes for additional stimulus out of Japan faded, while bargain- hunting on Wall Street lifted stock prices after three days of losses.

U.S. Treasury prices were generally flat after recent gains.

For the second time this week, policymakers from a major central bank cut short expectations for additional stimulus, with the governor of the Bank of Japan, Haruhiko Kuroda, saying Tuesday there was no need for more monetary support to escape deflation.

Investors had expected the BoJ to indicate more support was forthcoming, and the yen rose as the Bank of Japan kept its policy steady.

"You had a lot of players who were short the yen, and Kuroda dashed the hopes of stimulus," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.

The comments from the Bank of Japan followed remarks on Monday by several policymakers from the European Central Bank that they would ease policy further only if they thought the inflation outlook had deteriorated sharply.

Against the yen, the dollar lost 1.1 percent to hit a 10-day low of 101.94 yen, while the euro also shed 1 percent to 140.62 yen, the lowest level since March 28.

The yen had been under pressure in recent days on expectations that a rise in Japan's sales tax, which took effect at the start of April, would hurt consumption, and that the BoJ might ease policy in coming months to soften the blow.

The dollar index, which measures the dollar against a basket of six major currencies, was off 0.57 percent and near lows last seen on March 19.

The dollar has been facing headwinds since Friday, when a report showed the U.S. economy added 192,000 jobs in March, down from about 200,000 in February, according to analyst Joe Manimbo at Western Union Business Solutions in Washington.

"The data depicted the world's biggest economy still struggling to shift into a higher gear, which keeps pressure off the Federal Reserve to raise rates for a while yet," Manimbo said in a note to clients.

On Wall Street, the Dow Jones industrial average rose 37.59 points or 0.23 percent, to 16,283.46, the S&P 500 gained 8.73 points or 0.47 percent, to 1,853.77 and the Nasdaq Composite added 37.575 points or 0.92 percent, to 4,117.328.

Investors bought beaten-down shares of social media and Internet companies.

The day's biggest gainers included Amazon.com Inc, up nearly 3.0 percent at $326.77, Yahoo! Inc, up 3.2 percent at $34.14, and LinkedIn Corp, up 4.3 percent to $166.50. The Global X social media index rose 2.8 percent to $18.59.

The U.S. earnings season gets under way this week. Aluminum producer Alcoa Inc will report after the market close on Tuesday. Financials JPMorgan Chase & Co and Wells Fargo & Co will issue results on Friday.

Global stock markets were mixed, with the MSCI world equity index up 0.38 percent.

U.S. Treasuries prices, after two days of strong gains, were flat ahead of a $30 billion three-year note sale, the first of $64 billion in new coupon-bearing supply this week.

Investors turned their attention to the impending supply and considered whether the yields would be attractive enough in the auctions after the recent rally.

Benchmark 10-year notes were last up 2/32 in price to yield 2.686 percent. Thirty-year bonds rose 6/32 in price to yield 3.548 percent.

In commodity markets, safe-haven gold was trading around two-week highs, up nearly 1 percent from the previous session at $1,309.10 an ounce.

U.S. crude for May gained 1.9 percent to $102.35 a barrel, pushed up by the renewed tensions over Ukraine, a major supply route for Russian gas to Europe. But the rise was capped by expectations U.S. crude oil stocks were building up.

Brent rose $1.63, or 1.5 percent to $107.45 a barrel. (Reporting by Michael Connor in New York; additional reporting by Marc Jones in London; Editing by Leslie Adler and Dan Grebler)

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