* Dollar hovers near 3-year low, more losses may be ahead
* Strong yen saps Tokyo stocks in holiday-thinned market
* Gold hits fresh record high on weak dollar
* U.S. economy, deficit worries, European debt also weigh
By Ronald Popeski
SINGAPORE, April 22 The dollar hovered around
three-year lows on Friday and looked set to come under further
pressure next week, while a stronger yen weighed on Tokyo stocks
in holiday-thinned Good Friday trade.
Gold hit a fresh all-time high of $1,509 an ounce,
extending its record-breaking rally to a sixth session, as the
weaker dollar prodded investors towards assets less reliant on
the U.S. economy.
The dollar index was steady at 73.99 against a basket
of major currencies after slipping to its lowest since mid-2008
on Thursday, weighed down by expectations that the Federal
Reserve will keep interest rates at record lows for some time to
come and by bitter divisions in Washington over how to slash the
gaping budget deficit.
Analysts said it could extend recent losses next week, with
all eyes now on its record low of 70.698 struck in March 2008.
"The biggest reason behind the fall is waning investor
confidence in U.S. assets. The market is waking up to the fact
that fiscal problems are not limited to euro periphery
countries," said Daisuke Uno, chief strategist at Sumitomo
Mitsui Banking Corp in Japan. ID:nL23389078]
Trade was expected to remain thin into early next week with
most markets around the world closed from Friday through Easter
Japan's Nikkei-225 share average ended down 0.04
percent but pared initial losses after news that Renesas
Electronics , a major chip supplier to the auto
industry, would resume operations at an earthquake-hit factory
earlier than expected
Tokyo stocks had slipped in early trade as dollar weakness
boosted the value of the yen.
In Seoul, one of the other few Asian markets open on Friday,
the Korea composite Stock Price Index edged down 0.03
percent, while Shanghai fell 0.7 percent, shrugging off
gains in U.S. markets overnight.
Wall Street posted its first positive week in three as
healthy earnings news boosted the Dow Jones industrial average
by 0.42 percent, though gains were offset by the fact that
180 S&P names were due to report financial results next week.
Adding to pressure on the dollar, data overnight showed the
U.S. economy was struggling to regain momentum.
Factory activity in U.S. Middle Atlantic states slowed
sharply in April, new jobless claims fell less than expected and
other reports showed steep declines in home prices in February.
Data next week is expected to show U.S. growth slowed
significantly in the first quarter.
China's yuan hit another record high, trading at
6.5096 to the dollar in early afternoon as the central bank
fixed its mid-point at an all-time high.
Like many other Asian governments this year, Beijing appears
to have decided to allow more gains in its currency to help tame
But analysts discounted any notion that the People's Bank of
China would oversee a one-off currency revaluation as it did in
July 2005, a move that could hurt exporters and place huge
pressure on the government.
Oil prices also remained high, with the weaker dollar
attracting more buying. U.S. Crude oil futures ended higher for
the third straight day on Thursday and Brent crude stood at just
over $124 a barrel.
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(Reporting by Ron Popeski)