US Economy Dogs Stocks As Euro Rallies
LONDON (AP) â¿¿ Signs that the U.S. economy is struggling hit stocks and oil prices Thursday, while the euro dropped sharply after the European Central Bank's president declined to indicate that interest rates would rise again next month, as traders were expecting.
A run of weak U.S. economic data has weighed on markets in recent days ahead of Friday's closely watched U.S. payrolls data, which often set the stock market tone for a week or two. A surprise rise in weekly U.S. jobless claims added to the concern in the markets that the recovery in the world's largest economy was slowing down.
In Europe, the FTSE 100 index of leading British shares was down 1.1 percent at 5,919 while France's CAC-40 fell 1.5 percent at 3,984. Germany's DAX was 0.7 percent lower at 7,318.U.S. stocks were poised for further declines at the open â¿¿ Dow futures were down 0.5 percent at 12,614 while the broader Standard & Poor's 500 futures fell 0.6 percent at 1,335. Elsewhere, the euro was in focus after the European Central Bank's President Jean-Claude Trichet held back from indicating that an interest rate hike was likely next month. Investors had been expecting Trichet to say the ECB was practicing "strong vigilance" over inflation, which in the past has been a key phrase to flag a rate increase the following month. Instead, he told a press briefing Thursday after the bank held its main interest rate at 1.25 percent that the bank would "monitor very closely" the risk of higher inflation before deciding another increase. Traders interpret that formulation of words to mean no increase before July at the earliest. With expectations of a June rate hike diminished, the euro slid nearly a cent, or 0.8 percent, to $1.4710. "The Trichet comments have provided the all clear for the market to sell the euro," said Alan Ruskin, an analyst at Deutsche Bank.
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