The U.S. dollar was broadly lower Thursday, following a successful Spanish bond auction and indications that the Swiss National Bank isn't prepared to continue the heavy intervention that was reported last month.

After a slow start, the euro extended its recent gains, and although overextended on a short-term basis still appears on track for $1.25 and possibly even $1.2750 as the correction of the past couple of months continues. Sterling, which dipped below $1.4650 in late Asia, has rebounded smartly to test the $1.4800 area, on the back of stronger-than-expected retail sales and looks poised to challenge Wednesday's high near $1.4850, the high of May 13. The dollar is largely sidelined against the yen. For the last eight sessions, it has finished the North American session in a 91.30 yen to 91.65 yen range.

Asian equities were lower and the MSCI Asia-Pacific Index slipped 0.3% from the four-week high set Wednesday. Weighing on prices was weakness in the various metals, including copper, which was off more than 2%.

China, which returned from a holiday, was unable to catch up with the almost 3% gain made in the MSCI benchmark when its markets were closed. The Shanghai Composite eased 0.4%. Tighter money market conditions as investors begin to build cash holdings to participate in the Agriculture Bank of China's initial public offering may have weighed on sentiment.

European bourses were posting healthy 0.8% to 1% gains, helped by the successful bond auctions in Spain and France. The oil and gas sector, helped by a bounce in BP ( BP), and financials are the leading sectors Thursday. Health care and utilities are laggards.

The sale of 10- and 30-year bonds in Spain had posed event risk, but the higher yields brought in buyers and markets responded accordingly. Spain's 10-year bond yield has fallen 12 basis points, paring back some of Wednesday's increase.

Although the French bond auction was also well-received, French and German bonds are weaker as some of the safe-haven bid has been removed, at least for the moment. U.K. gilts were outperforming, despite the better retail sales report. The market is looking ahead to next week's budget.

The easing of the safe-haven bid is also weighing on U.S. Treasuries, where yields are 2 to 3 basis points higher through the coupon curve.
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