* European stocks fall, dollar approaches six-month low
* Ukraine crisis, slide in tech stocks weigh on markets
* Focus on Fed Chair Yellen's testimony later
By Carolyn Cohn
LONDON, May 7 European shares fell and the
dollar hovered above six-month lows against a basket of
currencies on Wednesday on an overnight drop in U.S. tech stocks
and on concerns over the deepening crisis in Ukraine.
Investors were also awaiting congressional testimony from
U.S. Federal Reserve Chair Janet Yellen later in the day.
U.S. stock futures were pointing to a
lower start on Wall Street, after the tech-heavy Nasdaq index
fell 1.4 percent in the previous session.
Twitter shares sank 18 percent to a new low on
Tuesday, wiping out more than $4 billion of its market value, as
early investors sold stock in the messaging service after a
six-month "lock-up" expired.
Easy monetary policy in the developed world is causing
market imbalances, analysts said.
"It looks like we're mirroring the past cycles - addressing
over-indebtedness problems with more debt, printing money and
pushing up asset prices," said Iain Stewart, investment manager
at Newton Investment Management.
"Almost certainty we will see bubbles."
Ukraine, which appears to sliding towards war after its
deadliest week since a separatist uprising began in its mainly
Russian-speaking east, also remains a concern for the markets.
European shares fell 0.25 percent and European tech
stocks fell 0.3 percent towards three-month lows,
heading for their first five-day losing streak in seven months.
France's No. 2 listed bank, Societe Generale,
booked a 525 million euro ($731 million) writedown on the value
of Russian unit Rosbank, blaming the months of crisis in Ukraine
and the fall in the Russian rouble. Its shares fell 1.4 percent.
Danish brewer Carlsberg, one of Europe's
blue-chips with the highest exposure to Russia, fell 0.7
percent. It partly blamed currency volatility in Russia for a
fall in its first-quarter operating profit.
Russian stocks rose around 1 percent,
however, with local players focusing instead on efforts to find
a diplomatic solution to the crisis in Ukraine.
The U.S. dollar index, which measures the greenback
against six major currencies, stood at 79.13 after falling on
Tuesday to 79.06, its lowest in more than six months.
The dollar weakened to 101.40 yen, its lowest since
April 14, before trimming losses slightly, and stabilised at
$1.3928 per euro, just above recent eight-week lows.
The immediate focus for the dollar was on Yellen's
congressional testimony. The Fed is widely expected to stick to
a dovish stance, doing little to arrest the recent fall of the
dollar, which has shown little reaction to positive economic
"Fed Chair Yellen is likely to dodge any questions
pertaining to the specific timing of interest rate rises, given
the furore after her suggestion at a press conference in March
that rates might rise about six months after asset purchases
end," analysts at Capital Economics wrote in a note to clients.
Expectations that the Fed will not raise interest rates
soon, in addition to safe-haven bids have kept U.S. Treasury
The U.S. Treasury 10-year note rose slightly in
price to yield 2.5784 percent, after the yield touched a
three-month trough of 2.57 percent on Friday.
German Bund futures rose 9 ticks to 144.76, and
peripheral debt yields were trading around multi-year or record
German manufacturing orders recorded their biggest decline
in 1-1/2 years in March, and French industrial output
unexpectedly fell. That may give the ECB another reason to
loosen monetary policy, alongside a strong euro and low
"It raises the likelihood that the ECB will act to address
not only the inflation situation, but weak macro-economic data
as well," said Alexander Aldinger, an analyst at Commerzbank.
In the commodities markets, oil rose after crude stocks
decreased, defying expectations for an increase, with
geopolitical risks helping put a floor under prices.
U.S. crude was up 0.78 percent at $100.28 a barrel.
Safe-haven gold rose to $1,310.90 an ounce,
approaching three-week highs.
(Additional reporting by Natsuko Waki and John Geddie in London
and Shinichi Saoshiro in Tokyo; Editing by Hugh Lawson)