May 13, 2011 / 7:17 PM / 7 years ago

US SMALL/MIDCAPS-Investors take cover as dollar rises

NEW YORK, May 13 (Reuters) - Mid- and smallcap stocks were lower on Friday as the U.S. dollar strengthened, unnerving investors and forcing the unwinding of some dollar-funded bets on risk assets.

The euro traded lower against the greenback as investors refocused on euro zone debt issues ahead of meetings by finance officials in Brussels. The single currency had initially risen for the day after strong economic data from France and Germany.

“People closer to the frontline think there’s a bit of a short dollar/long equity position that’s getting a little squeezed,” Jim Grefenstette, portfolio manager of the midcap growth strategy fund at Federated Investors in Pittsburgh.

He said earlier U.S. data showing a tick up in consumer prices that matched expectations and a higher-than-forecast rise in consumer confidence were net positives for equities, but market moves were responding to technical markers more than to fundamentals. For details on the data see [ID:nN13186747].

    Among the sectors worst hit were financials, with mid-cap Astoria Financial AF.N down 3.1 percent at $13.86 and smallcap Stifel Financial (SF.N) down 4.3 percent at $40.60.

    The S&P MidCap 400 index .MID fell 0.9 percent while the S&P SmallCap 600 index .SML dropped 1.1 percent. In comparison, the benchmark S&P 500 .SPX was down 0.7 percent.

    Midcap Eastman Kodak EK.N rose 5.3 percent to $3 after a judge at the International Trade Commission said the company did not infringe Apple Inc’s (AAPL.O) patented technology for digital cameras. [ID:nN12216453].

    Patriot Coal Corp PCX.N shares dropped 4 percent to $22.31 a day after posting results. (Reporting by Rodrigo Campos; Editing by Leslie Adler)

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