April 3, 2014 / 8:46 PM / 4 years ago

GLOBAL MARKETS-Euro falls on ECB comments; stocks dip after US data

* Stronger dollar weighs on gold, copper

* Brent bounces back from 5-month low on doubts on Libya

* Euro briefly dips to lowest level vs USD since late Feb (Updates to U.S. market close)

By Rodrigo Campos

NEW YORK, April 3 (Reuters) - The euro fell on Thursday after the European Central Bank pledged to use unconventional measures if needed to battle low inflation, and a global gauge of stocks dipped after touching a six-year high.

Brent crude rallied more than 1 percent, bouncing from a five-month low, on doubts that a standoff in Libyan ports will be resolved soon.

The ECB, as expected, kept its main interest rate at a record low of 0.25 percent and the rate for bank deposits at central banks at zero, but comments from its president, Mario Draghi, weighed on the single currency.

Draghi told a news conference that he and his colleagues expected a period of low inflation, and that action would be taken if it dragged on too long.

“The ECB is being slightly more dovish than the market expected,” said Kathy Lien, managing director at BK Asset Management in New York. “The main takeaway is that the council is considering unusual techniques, and that’s negative for euro/dollar.”

U.S. data was mixed, with the services sector showing growth, while some employment components flashed weakness. The number of Americans filing new claims for unemployment benefits rose more than expected last week.

Friday’s release of the government’s nonfarm payrolls report for March is expected to show 200,000 jobs were created last month. If the estimate is met, it would be the highest gain since November.

Other data on Thursday showed the U.S. trade deficit unexpectedly widened in February, suggesting weaker-than-anticipated first-quarter growth.

On Wall Street, major stock indexes fell after the Dow and the S&P 500 hit intraday record highs shortly after the open. Reluctance to make big bets ahead of Friday’s payrolls report translated into profit taking in so-called momentum stocks, and the Nasdaq Composite was hardest hit among main indexes.

“Momentum names are usually the ones that take the quickest hit when investors get anxious or worried, in this case, a bit of hesitancy ahead of tomorrow’s payrolls,” said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research in Austin, Texas.

The Dow Jones industrial average fell 0.45 point to 16,572.55, the S&P 500 lost 2.13 points, or 0.11 percent, to 1,888.77, and the Nasdaq Composite dropped 38.716 points, or 0.91 percent, to 4,237.74.

MSCI’s global equities gauge slipped less than 0.2 percent after touching its highest level since December 2007. U.S. dollar-denominated Nikkei futures dropped 0.1 percent.


Longer-dated U.S. Treasuries yields edged lower after the jobless claims data caused some jitters ahead of Friday’s payrolls report and spurred a safety bid.

“The market had basically factored in a pretty good report, and there was a rethinking of that view,” said Anthony Valeri, fixed income strategist at Boston-based LPL Financial.

The 30-year Treasury bond rose 15/32 in price to yield 3.623 percent, compared to a yield of 3.649 percent late on Wednesday. The benchmark 10-year U.S. Treasury note was up 3/32 in price to yield 2.7935 percent.

In currencies, the euro was last off 0.2 percent against the dollar at $1.3719, after hitting $1.3697, the lowest level since Feb. 28.

Against the Japanese currency, the dollar was little changed after earlier trading above 104 yen for the first time since Jan. 23.

In commodities markets, gold and copper prices were weighed by the strength in the greenback. Spot gold fell 0.2 percent to $1,286.80 an ounce, and three-month copper on the London Metal Exchange was down 0.5 percent at $6,643.

Brent crude rose above $106 a barrel a day after hitting a five-month low, as doubts persisted that a lasting deal was imminent to reopen vital Libyan oil ports.

Though Libya’s acting oil minister, Omar Shakmak, said on Thursday there were “good intentions” that could see the blockade end in days, analysts were cautious.

“The rebels have imposed conditions that are virtually impossible to meet, demanding, for example, a referendum on greater autonomy in the eastern provinces,” Commerzbank said in a note.

Brent rose 1.4 percent $106.25 a barrel, and U.S. crude added 0.8 percent to $100.39 a barrel. (Reporting by Rodrigo Campos; additional reporting by Anna Louie Sussman, Sam Forgione, Michael Connor and Angela Moon; editing by Leslie Adler and Chizu Nomiyama)

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