* European shares under pressure after falls elsewhere
* Lower U.S. bond yields, BOJ comments push yen higher vs
* Eyes on Fed minutes, Yellen speech
By Nigel Stephenson
LONDON, May 21 European stocks were under
pressure on Wednesday, spooked by overnight falls on Wall
Street, and the dollar fell against the yen as the Bank of Japan
suggested the world's third largest economy needed no additional
stimulus for now.
A broad flight to quality helped push low-risk German Bund
futures higher and weighed on lower-rated euro zone debt. Gold,
also sought as a safe haven, held steady.
Europe's FTSEurofirst 300 share index was down 0.02
percent by 0815 GMT, extending the declines of recent days and
taking it further away from the 2014 peak it hit last week.
Rallies in European shares have paused on signs the economic
recovery is stuttering. Elections to the European Parliament in
coming days are being watched closely for any impact on reforms
in several countries.
"We have seen since last Thursday some corrective action in
(low-rated euro zone bond) markets ahead of the EU elections.
This can go further," said Matthias van der Jeugt, a fixed
income strategist at KBC.
The fall in European shares followed a 0.2 percent drop in
Tokyo and a broad selloff on Wall Street, in which
Caterpillar dropped 3.6 percent after the heavy
machinery company said "retail statistics" for the three months
to April were down 13 percent.
Tuesday's fall took losses in U.S. stocks to more than 1
percent since the Dow and the S&P 500 hit record closing highs
on May 13 as investors seek confirmation the U.S. economy is
The BOJ kept monetary policy steady, as expected, and
signalled its aggressive stimulus was helping broaden the
economic recovery. Governor Haruhiko Kuroda was optimistic Japan
was on course to meet the bank's inflation target.
Later on Wednesday, Federal Reserve chair Janet Yellen
speaks in New York and the U.S. central bank will release the
minutes of its latest policy meeting. Most market participants
do not expect any solid clues on when interest rates may rise.
Benchmark U.S. 10-year Treasury yields dipped in
Europe to 2.51 percent, close to half-year lows. Comments from a
senior Fed official that the central bank would be "relatively
slow" in raising interest rates saw the dollar fall to a 3-1/2
month low against the yen.
"Kuroda's comments are lowering expectations of further BOJ
stimulus and there is position squaring going on which is
driving dollar/yen lower," said Manuel Oliveri FX strategist at
"At the same time one has to be cautious about the FOMC
minutes with Yellen also due to speak later in the day."
The drop in U.S. yields also helped the euro, which rose
0.15 percent to $1.3717, pulling away from a 2-1/2 month
low of $1.3648 hit last week on expectations the European
Central Bank will ease monetary policy in June.
German Bund futures rose and cash 10-year yields
edged lower, while yields on 10-year Spanish and
Italian bonds each rose 9 basis points to 3.17 percent and 3.33
Weaker shares burnished gold's appeal as a hedge and the
metal held steady below $1,300 an ounce.
Brent crude oil futures edged up towards $110 a
barrel as U.S. crude inventories fell and on renewed violence in
OPEC producer Libya.
(Additional reporting by Lisa Twaronite in Tokyo, Alistar Smout
in Edinburgh, Emelia Sithole-Matarise and Anirban Nag in London;
Editing by John Stonestreet)