June 13, 2013 / 6:11 PM / 5 years ago

GLOBAL MARKETS-Dollar slumps versus yen; Wall Street rises on data

* Nikkei tumbles more than 6 pct, emerging markets down 1
    * U.S. stocks gain after strong U.S. retail sales, jobless
claims data
    * Dollar slides to lowest vs yen since BOJ easing in early

    By Wanfeng Zhou
    NEW YORK, June 13 (Reuters) - The U.S. dollar fell to a
10-week low against the yen on Thursday, extending a selloff on
worries about an end to central bank stimulus, while Wall Street
stocks moved higher on stronger-than-expected U.S. economic
    Japan's Nikkei fell 6.4 percent overnight, its
second-biggest daily drop in more than two years. European
markets lost more than 1 percent before recovering to end
slightly lower.
    Concern about a pullback of central bank support mounted
after recent comments from Federal Reserve Chairman Ben Bernanke
on the Fed's stimulus program and a decision by the Bank of
Japan earlier this week to hold off on easing further.
    The concerns have fueled a selloff in global equities,
emerging markets, risky bonds and commodities, all of which have
been buoyed by central bank liquidity, while driving the
safe-haven yen sharply higher.
    "This week's BOJ meeting, which offered no new policy
initiatives or stimulus programs, was the catalyst for the rapid
change in sentiment in the foreign exchange market," said Boris
Schlossberg, managing director of foreign exchange strategy at
BK Asset Management in New York.
    The dollar lost 1.3 percent to 94.77 yen as weakness
in equities and emerging markets prompted investors to buy back
the low-yielding Japanese currency, which is a favorite funding
currency in these trades. 
    The dollar fell as low as 93.78 yen, its lowest since April
4, giving back almost all the gains made since the Bank of
Japan's aggressive monetary easing was announced on that day.
    Losses in Japanese stocks also prompted foreign investors to
unwind hedges they took out to protect themselves from the yen's
recent slide. That also contributed to the currency's gain.
    U.S. stocks got a lift after data showed retail sales rose
more than expected in May and first-time applications for
jobless benefits fell last week, suggesting resilience in the
U.S. economy. 
    The Dow Jones industrial average gained 113.46
points, or 0.76 percent, at 15,108.69. The Standard & Poor's 500
Index was up 14.10 points, or 0.87 percent, at 1,626.62.
The Nasdaq Composite Index was up 27.92 points, or 0.82
percent, at 3,428.35. 
    "The bright spot for the entire week was the data point
today on U.S. retail sales. That data supports the notion that
the U.S. consumer is moving forward with spending despite the
uncertainty of Fed tapering," said Anastasia Amoroso, global
market strategist at J.P. Morgan Funds in New York.
    The Federal Reserve meets next Tuesday and Wednesday. Some
analysts said if the Fed does not hint at an imminent exit from
its quantitative easing next week, the market could see a relief
    The MSCI All-Country World Index was flat at
361.65 follow two days of losses that moved it further away from
a five-year peak set last month. European shares closed
0.07 percent lower as bargain-hunters picked up hammered mining
and banking stocks.
    An index of emerging market equities hit 11-month
lows and was last down nearly 1 percent. Most emerging
currencies remained under heavy pressure, with the Indian rupee
falling to a record low. 
    The euro lost 1.3 percent 126.38 yen, while against the
dollar, it traded little changed at $1.3338.
    Brent crude rose 58 cents to $104.07 a barrel,
having traded as low as $102.75 on reports indicating weak
demand, including a cut in the outlook for global economic
growth by the World Bank.
    U.S. crude rose 30 cents to $96.18 a barrel.
    Spot gold fell 0.7 percent to $1,378 an ounce. 
    Investors headed for traditional safe-haven government debt.
The benchmark 10-year U.S. Treasury note was up 14/32, the yield
at 2.1776 percent. German government bonds 
had their biggest gains in a week.
    The recent selling of euro zone periphery debt also resumed
, and Italy's borrowing costs rose at an auction
of three-year debt, although yields at a parallel 15-year sale
were little changed.
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