(Corrects to show rally was six days.)
* Shares dip after 6-day rally, Italy politics weigh in
* Gold eases after hitting 3-month high
* Investors look for more proof of solid U.S. growth
By Marc Jones
LONDON, Feb 13 World shares stepped back from
three-week highs on Thursday, as a six-day run of gains fuelled
by assurances from major central banks about their supportive
policies came to a halt.
In Europe, the fading momentum was compounded by fresh
political uncertainty in Italy where Prime Minister Enrico Letta
defied pressure to make way for the centre-left leader Matteo
Italian stocks led the losses among the region's
bourses with a fall of 1.1 percent, while the country's
government bonds were the worst performers on the
"Right now you are not sure which (political) scenario will
be in play and some of the scenarios could lead to inaction,"
said UniCredit strategist Luca Cazzulani in Milan.
"Any sort of political uncertainty can be unwelcome, but it
is certainly not only factor. Some people are booking profits
and Italy also has bond auctions today."
A batch of disappointing updates from blue-chip companies in
Europe also weighed on the region's stock markets.
In Asian trading, Wall Street's stumble overnight and
ongoing nervousness about the global recovery had taken their
MSCI's broadest index of Asia-Pacific shares outside Japan
fell 0.7 percent after jumping 4.5 percent in
the previous five sessions. Japan's Nikkei fell 1.8
percent but that too was after a 4.6 percent surge in the past
Markets are still sitting on solid gains that stem from
relief over the continuity in Federal Reserve policy, hints that
the European Central Bank could provide more support in the euro
zone and an easing of pressure on emerging markets.
Janet Yellen's appearance in front of a Senate banking panel
scheduled for later has been postponed due to bad weather
. But she made it clear on Tuesday, in her first
public remarks since becoming Fed chair, that she would not make
any abrupt changes to monetary policy.
Adding to the positive mood, Congress approved legislation
on Wednesday to increase the U.S. government's debt limit for a
year, avoiding chances of a repeat of the political showdown
that led to government shutdown in October.
In the currency market, the British pound stood out after a
surprisingly upbeat economic outlook from the Bank of England
prompted markets to price in an interest rate hike in early
The sterling edged up to $1.6633 in early trading ,
getting near its 2 1/2-year high of $1.6667 hit late last month.
The euro also saw a bit of a recovery to $1.3626,
having tumbled on Tuesday after ECB Executive Board member
Benoit Coeure told Reuters cutting rates and charging banks to
park spare cash at the ECB was "a very possible option" and one
it was looking at seriously.
"Coeure's comments cannot be lightly dismissed and stoke
expectations for action at the March meeting," said Sean Callow,
currency strategist at Westpac in Sydney.
The biggest mover among the majors was the Australian dollar
. It tumbled around one percent to $0.8934 after
Australian unemployment hit its highest in a decade, reviving
rate cut speculation.
As risk assets took a back seat, oil prices fell with U.S.
crude futures back under $100 a barrel after dropping 1
percent from Wednesday's four-month high. Gold prices also eased
to $1,288, after racing to a three-month high of
$1,295.91 the previous day.
Recent U.S. data, including two straight months of weak jobs
growth, have raised questions over whether the world's biggest
economy can sustain the strength it showed in the second half of
While it shows the global recovery may not be as strong as
many economists had hoped, investors have the comfort that it
could prolong the lifespan of ultra-easy central bank support
that has seen a surge in markets in the last couple of years.
"There are emerging doubts about whether you can just blame
all the soft data on the weather," said Norihiro Fujito, a
senior investment strategist at Mitsubishi UFJ Morgan Stanley
Securities, referring to the recent U.S. cold snap.
"Investors are a bit bewildered. While they are relieved
that major events are out of the way, they are still hesitating
to chase shares higher."
Next up on the data front are January retail sales and
weekly jobless claims data, both due to be released at 1330 GMT.
(Additional reporting by Hideyuki Sano in Tokyo and Ian Chua in
Sydney; Editing by Toby Chopra)