* World share markets retreat as monetary policy concerns
* Government bond prices lower
* Oil gains despite report showing rising inventories
By Herbert Lash
NEW YORK, June 12 The dollar and world equity
markets retreated on Wednesday as persistent concerns about
central banks' support for their economies - and financial
markets - weighed on the near-term prospect for stocks and other
Stocks, bonds, commodities and the dollar all suffered a
sharp selloff on Tuesday when the Bank of Japan's decision to
leave its policies unchanged spooked investors already worried
the Federal Reserve will soon curb its bond-buying program.
The dollar index of the greenback versus six other major
currencies dropped to its lowest in nearly four months, weighed
by uncertainty over when the Fed will pare back its ultra-loose
The index fell as low as 80.748, its lowest
since Feb. 20, and was last down 0.2 percent at 80.959.
The euro rebounded to gain 0.14 percent to 1.3333
against the greenback.
"There is a lot of consolidation going on headed into next
week's Fed meeting,' said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington, D.C. "There is
broad volatility and people are afraid the Fed will push off its
bond-buying tapering until later in the year."
Traders said they saw little room for bigger near-term
gains. Early gains in equities on Wednesday were more a
"recovery rally" rather than anything more fundamental, said
Peter Rice, director of strategy at Logic Investments.
"Realistically, we're looking range-bound," he said.
The Dow Jones industrial average was down 54.94
points, or 0.36 percent, at 15,067.08. The Standard & Poor's 500
Index was down 5.85 points, or 0.36 percent, at 1,620.28.
The Nasdaq Composite Index was down 16.96 points, or
0.49 percent, at 3,419.99.
The pan-European FTSEurofirst 300 index of leading
regional shares turned lower after early gains, falling 0.41
percent to close at 1,174.79.
The euro zone's blue-chip Euro STOXX 50 index
fell 0.62 percent to 2,666.52.
MSCI's all-country world equity index
slipped 0.13 percent.
"There just isn't much news to offset the potential negative
of what will eventually happen, which is the Fed tapering off,"
said Rick Meckler, president of LibertyView Capital Management
in Jersey City, New Jersey. "You don't have fundamental evidence
that the Fed will or will not be tapering off soon, and the
market is caught in the middle period."
The Fed appears to be moving toward stepping out of
quantitative easing while the BoJ has an aggressive policy in
place but is not eager to add to it, said Camilla Sutton, chief
currency strategist at Scotiabank in Toronto.
"Increasingly, monetary policy appears to have reached its
limit in terms of stimulus," she said.
Brent crude rose above $103, buoyed by the gains in global
stock markets despite an unexpected jump in U.S. oil inventories
and a cut in estimates for demand growth by the world's big oil
The International Energy Agency said modest economic growth
was limiting oil demand worldwide and some developed economies
would have absolute declines in consumption this year.
Brent crude oil futures recovered sharply to trade
at $103.65 a barrel, up 69 cents on the day, after falling to a
low of $102.23 earlier in the session.
U.S. light crude oil rose 70 cents to $96.08.
U.S. government debt prices rebounded but then traded near
break-even in choppy trade. The benchmark 10-year U.S. Treasury
note was down 5/32 in price to yield 2.2081 percent.
In commodity markets, copper rose off its lowest level in
almost six weeks to reach to $7,142 a tonne. while gold
steadied at $1,378 an ounce.