* MSCI world equity index pares earlier gains to trade flat
* Strong ADP report before Fed minutes lifts stocks, dollar
* Market focus now on Friday's December nonfarm payrolls
By Herbert Lash
NEW YORK, Jan 8 The dollar gained while a gauge
of global equity markets was little changed on Wednesday after
the release of minutes of the Federal Reserve's meeting in
December, when policymakers decided to trim the U.S. central
bank's asset purchases.
Equity markets' early gains were subdued as investors
awaited the minutes of the Fed's meeting, when Chairman Ben
Bernanke said it would begin trimming its stimulative bond
purchases to $75 billion a month from $85 billion a month.
The yield on the benchmark U.S. 10-year Treasury note fell
just below 3 percent before the minutes were released, and
remained there afterward.
"The dollar reaction has been fairly muted to this, and I
think that's because for the most part, the information that
we've received is not significantly different from what
(Bernanke) has been saying over the past few weeks," said Brian
Dangerfield, currency strategist at RBS Securities in Stamford,
The dollar and U.S. stocks mostly rose after payrolls
processor ADP said U.S. private employers added a
higher-than-expected 238,000 jobs in December, the strongest
increase in 13 months.
ADP's National Employment Report also revised November's job
gains higher, just two days before the government's closely
watched monthly nonfarm payrolls report. That data is more
comprehensive as it includes both public and private sector
Investors are looking to Friday's payrolls report to assess
whether the pace and size of the Fed's scaling back of its bond
buying either quickens or increases at a meeting later this
Economists polled by Reuters have forecast 196,000 nonfarm
jobs were added to the U.S. economy in December.
"If we get a 200,000 or north jobs report on Friday, it
increases the likelihood, along with that improving data, the
Fed continues its tapering process at the January meeting," said
Darrell Cronk, regional chief investment officer of Wells Fargo
Private Bank in New York.
MSCI's world equity index, which tracks
shares in 45 countries, pared its early gains to trade flat,
just below a six-year high. Overnight in Tokyo, the Nikkei
jumped 1.9 percent to approach its own six-year peak.
On Wall Street, the Dow Jones industrial average
ended down 68.2 points, or 0.41 percent, at 16,462.74. The S&P
500 lost 0.39 point, or 0.02 percent, to 1,837.49 and the
Nasdaq Composite added 12.43 points, or 0.3 percent, to
European stocks seesawed around 5-1/2-year highs as equity
markets in the euro zone periphery extended a rally on rising
confidence their economies are starting to recover from the
region's debt crisis.
German exports rose for the fourth consecutive month in
November and industrial orders surged more than expected -
mostly based on overseas demand - a sign that Europe's largest
economy is benefiting from a nascent global upturn.
Spanish bond yields hit fresh four-year lows as markets took
an increase in Madrid's planned 2014 debt issuance in stride,
confident that rising growth would ensure sales go smoothly.
The pan-European FTSEurofirst 300 index of leading
regional shares closed up 0.11 percent at 1,321.19. The
blue-chip Euro STOXX 50 index closed flat, losing
The U.S. dollar gained broadly against the yen, the euro and
a basket of currencies.
The dollar rose 0.17 percent to 104.78 yen and firmed
against the euro, with the single currency last trading
0.26 percent lower at $1.3579.
Against a basket of six major currencies, the dollar index
reached a six-week high of 81.048 and was last up 0.24
percent on the day at 81.029.
Crude oil prices fell. Brent crude for delivery in February
slipped 20 cents to settle at $107.15 a barrel.
U.S. crude fell $1.34 to $92.33 a barrel.
U.S. Treasury debt prices fell on the ADP report. The
10-year Treasury note slid 15/32 in price to yield
2.9931 percent, just over a week after hitting a near 2-1/2-year
high yield of 3.041 percent, according to Reuters data.
Signs of a U.S. recovery have reassured some investors that
the world's largest economy can withstand the Fed's decision to
scale down its bond-buying program. The program drove many
investors into equities by curtailing returns on cash and bonds,
helping to fuel much of last year's stock market rally.
Markets are hoping the Fed minutes show a clear commitment
to keeping rates low for a long time.
"What investors were expecting is a confirmation from the
Fed in line with the announcement made late last year," said
Putri Pascualy, credit strategist at fund of funds Pacific
Alternative Asset Management Co. in Irvine, California.
"It seems that the Fed's intent is no surprises. They have
stuck to their goal of telegraphing their intent before the
minutes came out and the minutes confirmed a lot of the
decisions that were made," Pascualy said.
The European Central Bank meets on Thursday and analysts
doubt it will do more than flag its readiness to act when
needed, despite another surprising fall in euro zone inflation.