* Fed chief plays down chances of further stimulus
* European stocks fall 1 pct on Bernanke disappointment
* U.S. slowdown continues to hamper dollar, yen gains
* Oil falls as market awaits OPEC production targets
(Adds quote, detail, updates prices)
By Neal Armstrong
LONDON, June 8 European stocks fell on Wednesday
and the dollar dropped to a one-month low against the yen after
U.S. Federal Reserve Chairman Ben Bernanke offered a grim view
of the economy but failed to offer hints of fresh stimulus.
Concerns about growth in the world's largest economy have
dominated financial markets this month, and European stocks fell
to their lowest levels since mid-March, driving global stocks
0.5 percent lower on the day. .MIWD00000PUS
U.S. equity futures were down 0.4 percent at 1,279.00.
Bernanke acknowledged the U.S. economy had slowed down but
offered no suggestion the central bank was willing to step in
with a third round of bond buying -- a form of quantitative
easing -- to support growth. The dollar fell in response.
"QE3 looks as though it's become a distant hope. The markets
had pinned quite a lot on getting another form of stimulus,"
said Justin Urquhart Stewart, director at Seven Investment
The FTSEurofirst 300 .FTEU3 index of top European shares
was down 1 percent at 1,093.32 points, plumbing a two-and-a-half
month low and a sixth straight day of losses.
Uncertainty over whether European policymakers will manage
to pin down a deal for further financial aid for Greece also
hampered sentiment towards the euro zone.
The euro EUR= briefly rose to a one-month high of $1.4696
in Asia as the dollar floundered, but later eased to $1.4648,
off around 0.3 percent for the day, knocked by a slump in German
exports and a fall in industrial output. [ID:nB4E7GN03F]
The cost of insuring Greek and Portuguese debt against
default rose as investors fretted over the possibility of a
Greek debt restructuring and due to the risk aversion sweeping
through markets. [ID:nLDE7570J6]
German government Bunds rose around 13 ticks FGBLU1,
though outperformance in U.S. Treasuries overnight saw the yield
on 10-year U.S. paper fall to 9 basis points below that of
Bunds, the most in a year.
"Bernanke was dovish and it's the U.S. data that will set
the tone from here," said one bonds trader. "We're not out of
the woods with the euro zone periphery either and the last thing
they need is a slow-down in growth."
Greece needs substantial fresh aid from the euro zone to
avoid the currency bloc's first state insolvency, a German
newspaper reported on Tuesday, citing German Finance Minister
Wolfgang Schaeuble. [ID:nB4E7G900O]
The dollar hovered near a one-month low under 80 yen JPY=
as the Japanese currency firmed on the heightened risk-aversion
reflected in falls in share prices. The dollar index was also
within sight of one-month lows of 73.506 hit on Tuesday .DXY
Poor signs on growth add to market conviction that U.S.
interest rates will stay low for an extended period, while the
European Central Bank is expected to signal on Thursday it will
push forward with a further rise in interest rates next month.
Brent crude LCOc1 fell 0.5 percent to $116.36 a barrel,
after gaining $2.30 on Tuesday. Investors are trying to assess
whether OPEC will raise production targets at a meeting in
"Oil prices have been softening this morning on the back of
expectations that today's OPEC meeting could bring a increase in
production to match estimates of growth in oil demand," said
Jane Foley, senior currency analyst at Rabobank.
"High commodities prices are being associated with soft U.S.
growth and since QE may be a factor behind the acceleration in
prices in this sector, the outlook for oil prices is a crucial
element in policymakers' decisions." she added.
(Additional reporting by Nick Macfie, Brian Gorman and
Kirsten Donovan; editing by Patrick Graham/Ruth Pitchford)