* World equity index falls for 4th straight week
* Sentiment fragile ahead of Fed meeting next week
* Dollar posts worst week since July 2009 vs yen
By Wanfeng Zhou
NEW YORK, June 14 U.S. stocks fell on Friday and
the dollar finished its worst week in almost four years against
the yen as investors worried that major central banks may soon
start withdrawing stimulus and after data showed a decline in
U.S. consumer sentiment.
But European shares ended higher, supported by signs of
merger and acquisition activity in the region. That helped boost
the MSCI world index 0.1 percent on the day. The
index, however, fell for a fourth straight week.
Jitters over the longevity of monetary policy around the
world have roiled markets recently, and nerves were stretched
further this week when the Bank of Japan decided to hold policy
The concerns have fueled a selloff in global equities,
emerging markets, risky bonds and commodities, which have been
buoyed by central bank liquidity, while driving the safe-haven
yen sharply higher.
Wall Street stocks closed their third negative week in four
as investors took profits after the S&P 500 recorded its second
best day of the year on Thursday. Stocks rallied more than 1
percent in the previous session on stronger U.S. economic data.
The market is "giving back some of those gains from
yesterday, which I think really caught people by surprise ...
and I certainly think the economic news wasn't bullish," said
Joe Saluzzi, co-manager of trading at Themis Trading in Chatham,
"We go through these ups and downs," he said. "I would still
say this market is certainly driven by central banker thoughts
and currency markets like the Japanese yen."
The Dow Jones industrial average ended down 105.90
points, or 0.70 percent, to 15,070.18. The Standard & Poor's 500
Index fell 9.63 points, or 0.59 percent, to 1,626.73. The
Nasdaq Composite Index lost 21.81 points, or 0.63
percent, to 3,423.56.
Attention is shifting to a policy meeting of the Federal
Reserve next week, which would shed light on when the U.S.
central bank plans to scale back its monthly $85 billion bond
"Markets are looking at next week's Fed meeting to be the
big driver in the short-term," said Kim Forrest, senior equity
research analyst at Fort Pitt Capital Group in Pittsburgh.
Fed chief Ben "Bernanke has really increased the amount of
transparency in the Fed's thinking," said Forrest. "This isn't
going to be a jack-in-the-box surprise Fed; it's going to be a
Fed that clearly indicates what it's going to do. That's why
people are looking to this meeting in particular."
U.S. data on Friday showed consumer sentiment edged off a
six-year high in June while manufacturing output picked up a bit
last month, suggesting the economy remained on a moderate growth
path. Other data showed wholesale prices rose more than expected
in May but underlying inflation pressures remained muted.
Top European stocks climbed 0.2 percent, tracking a
rebound in Japanese and Asian shares.
Emerging market equities as measured by MSCI rose
1.1 percent on Friday, although they posted a fifth consecutive
week of losses.
Despite climbing 2 percent on Friday, Japan's Nikkei is
nursing losses of more than 15 percent since mid-May. The
volatility in stocks has driven a sharp rebound in the yen.
"The yen has proved to be investors' go-to safe haven to
ride out global stock market volatility," said Joe Manimbo,
senior market analyst at Western Union Business Solutions in
"The uncertainty has prompted investors to exit recently
overcrowded plays like betting on the dollar and Japan's Nikkei
stock index and against the yen," he said. "With that play now
in reverse, the yen has steadily been squeezed higher."
The dollar fell 1.2 percent to 94.21 yen and dropped
3.4 percent on the week, the biggest weekly loss since July
2009. The euro lost 1.4 percent to 125.70 yen. Against
the dollar, it slipped 0.2 percent to $1.3347.
The benchmark 10-year U.S. Treasury note was up 4/32, the
yield at 2.1331 percent as traders bet the Fed would
keep interest rates near zero for a protracted period to help
the economy even if the bank slows its bond buying this year.
Oil prices rose as news that the United States had authorized
sending U.S. weapons to Syrian rebels sparked concerns about
Middle East supplies.
Though Syria is not a global oil supplier, investors are
worried that an escalating civil war could lead to unrest in
oil-producing regions of the Middle East.
Brent crude rose 98 cents to settle at $105.93 a
barrel, while U.S. crude gained $1.16 to settle at $97.85
a barrel, having struck a nine-month high.
Spot gold rose slightly, to $1,388 an ounce, helped
by resilient demand for coins and bars and a pullback in U.S.
equities. Rising geopolitical tensions in the Middle East also
boosted the metal's safe-haven appeal, traders said.