Major U.S. stock indexes <.DJI> <.SPX> <.IXIC> were down nearly 2 percent in afternoon U.S. trading as investors fretted that chatter from hedge funds on a bank failure could prove accurate.

The decline came despite upbeat economic news from the United States and euro zone as well as a stabilization in Chinese shares after a rout on Monday.

The hedge fund talk “is a huge driver” of currency markets, said Dan Cook, senior market analyst at IG Markets Inc in Chicago. “When you have data like we had but the Dow drops, people are running for that safe haven.”

In midafternoon trading in New York the dollar index <.DXY>, which tracks a basket of six major currencies, was up 0.8 percent at 78.786, rebounding from a session low of 77.944, according to Reuters data.

The dollar was little changed against the yen at 93.01 yen, slightly above Monday’s seven-week low of 92.53, according to Reuters data.

But the yen was up 0.9 percent against the Canadian dollar , 0.7 percent against the Swiss franc , 0.8 percent against the euro and 0.8 percent against the pound .

The euro was down 0.9 percent against the dollar at $1.4205 , well below a session high of $1.4377 .

WHAT RECESSION?

The U.S. manufacturing sector expanded in August for the first time in more than a year and a half. The Institute for Supply Management’s index of national factory activity rose to 52.9 from 48.9 in July. For more see

Separate data showed pending sales of previously owned U.S. homes raced to a two-year high in July, further evidence the housing market was on a steady recovery path.

“Clearly, the U.S. data is surprising to the upside,” said Jack Iles, senior portfolio manager who helps manage $2.5 billion assets at MFC Global Investment Management in Boston.

But despite a batch of upbeat U.S. economic numbers, major currencies remained in ranges as investors continued to debate about the outlook for the global economy, analysts said.

“At the end of the day, the market is still in wait-and-see mode,” said Firas Askari, head of currency trading at BMO Capital Markets in Toronto. “We’re getting jostled around by every piece of data that comes out and I don’t think there’s a consensus that this economy has legs.”

Data released earlier also showed euro zone purchasing managers’ index (PMI) rose to 48.2 in August against forecasts for a 47.9 reading while German unemployment unexpectedly fell in August.

The data comes before a European Central Bank policy meeting on Thursday widely expected to keep benchmark rates steady at a historic low of 1 percent, with the focus on policymakers’ outlook on the economy.

Sterling erased early gains against the dollar and the euro after an unexpected dip in UK manufacturing in August, stoking concerns about the pace of recovery in the British economy.

Sterling was down 0.9 percent at $1.6135 , after touching a six-week low, and was little changed against the euro at 88.02 pence .

In other trading, the Australian dollar fell 2.1 percent to US$0.8265. The Reserve Bank of Australia, holding its cash rate at 3.0 percent as expected, said the current low level of rates was appropriate, countering speculation it would adopt an explicit tightening bias.

Sept 1 (Reuters)

But an early rally in U.S. stocks faded about midday in New York after Treasuries rose as investors swooped in to take advantage of sharp losses on Friday.

Oil rose to a 10-month high near $75 a barrel and other commodities also surged as optimism that major economies were pulling out of recession drove hopes of rebounding demand. .

Global stocks as measured by MSCI’s all-country world index <.MIWD00000PUS> rose 1.2 percent and was on track for a fifth straight session of gains.

The yen fell while the U.S. dollar slid against commodity currencies, such as the Australian and New Zealand dollars, as investors became more comfortable with riskier trades given the upbeat assessment of the world economy.

“Economic data is in favor of a stronger recovery than expected. We can be quite bullish on risky assets,” said Romain Boscher, head of equity management at Groupama Asset Management.

Euro zone industrial new orders in June rebounded 3.1 percent month-on-month, or more than expected, the European Union statistics office Eurostat said.

In the United States, economic activity improved again in July from extremely weak levels earlier this year, suggesting the recession is waning, a report from the Federal Reserve Bank of Chicago showed.

In addition, China’s latest data for July indicated that while growth was moderating after a strong second quarter, the recovery remained on track to achieve the government’s goal of 8 percent growth for the full year.

“The Chinese news was good and we had some positive news out of Europe as well,” said Rob Montefusco, a trader at Sucden Financial in London. “Technicals are pointing upwards.”

But U.S. stocks pared earlier gains. About 1 p.m. (1300 GMT), the Dow Jones industrial average <.DJI> was up 15.34 points, or 0.16 percent, at 9,521.30. The Standard & Poor’s 500 Index <.SPX> was up 1.11 points, or 0.11 percent, at 1,027.24. The Nasdaq Composite Index <.IXIC> was down 1.49 points, or 0.07 percent, at 2,019.41.

European shares hit their highest closing level in nearly 10 months, boosted by banks and miners.

The FTSEurofirst 300 <.FTEU3> index of top European shares ended 0.9 percent up at 975.19 points, the highest closing level since early November.

Banks were among top gainers, with DJ STOXX banking index <.SX7P> rising 1.8 percent.

Japan’s Nikkei average <.N225> jumped 3.4 percent, booosted by hopes for a global recovery and lifted by camera maker Canon Inc <7751.T> and other exporters.

Investors increased their risk-taking in the wake of stronger-than-expected U.S. existing home sales data and upbeat comments from Federal Reserve Chairman Ben Bernanke.

Copper prices rose to their highest in more than a week, helped by strong investment demand and bets the economic crisis is petering out.

Jesper Dannesbee, a senior commodities strategist at Societe General, said real demand has not improved that much it but will improve gradually through the year.

“This is follow through from Friday. There is a general appetite for risky assets driven by cheap money and lax monetary policy,” Dannesbee said.

Gold edged below $950 an ounce, under pressure from a firmer dollar, but remained rangebound as support from higher oil prices and investor demand prevented it falling further.

Spot gold was at $949.80 per ounce

U.S. Treasury debt prices rose, with the 30-year bond gaining more than a full point, as investors did some bargain hunting after Friday’s sharp losses and after the Federal Reserve bought government debt.

The benchmark 10-year U.S. Treasury note was up 19/32 in price to yield about 3.49 percent.

Benchmark euro zone government bonds ended flat as data bolstered the recovery view, but caution on its sustainability eased the selling pressure.

“The stock market has been the barometer for growth and potential inflation,” said Troy Buckner, managing principal of NuWave Investment Management in Morristown, New Jersey. “And yes. it’s been an extreme correlation between equity market movements and commodities, especially copper, aluminum and crude oil.”

But Buckner said that prices have climbed “too far too fast,” leading his firm to short crude and heating oil, while reducing long positions in copper and aluminum.

Euro zone government bonds ended flat as economic data bolstered the view the global economic recovery is under way but caution about the recovery eased selling pressure. Investors worried whether new U.S. debt issuance this week would be welcomed by buyers.

U.S. crude rose 51 cents to $74.40 a barrel.

Aug 24 (Reuters)

Solid U.S. and euro zone data and an upbeat assessment on the economy from Federal Reserve Chairman Ben Bernanke over the weekend earlier pushed investors to take on riskier investments at the expense of the the low-yielding yen and dollar.

“Conventional wisdom suggests that major currencies should trade within their recent ranges until liquidity improves after the Labor Day holiday,” said Wells Fargo currency strategist Vassili Serebriakov. “However, there is plenty of data in the U.S. and elsewhere to change that this week, with consumer-related numbers likely to be watched closely.”

Investors are looking ahead to upcoming U.S. and European data to confirm hopes that the world economy is improving.

The dollar was last up 0.1 percent at 94.49 yen while the euro slipped 0.1 percent to $1.4304 . Against the yen, the euro was unchanged at 135.20 yen .

The euro trimmed losses against the greenback after data showing much higher-than-expected euro zone industrial orders in June.

Sterling fell 0.6 percent on the day at $1.6405 .

The euro , meanwhile, hit an 11-week high against sterling at 87.27 pence, according to Reuters data.

Traders said the euro was pushed past a key options barrier at 87 pence, setting up further gains in the pair, while analysts said expectations for persistently low UK interest rates were weighing on the British currency.

The Federal Reserve’s Jackson Hole meeting over the weekend offered a variety of opinions about the global economy, with Fed Chairman Ben Bernanke acting as the cheerleader for growth.

But traders are keen to see how the euro zone economy fares, especially after higher-than-forecast purchasing managers’ index readings last week. Germany’s Ifo survey of business sentiment will be key this week, analysts said.

The U.S. Conference Board will release its August consumer confidence index on Tuesday, followed by the Reuters/University of Michigan consumer sentiment snapshot on Friday.

Nouriel Roubini, professor at New York University’s Stern School of Business and one of the few economists who accurately predicted the magnitude of the current crisis, wrote in The Financial Times on Monday that there’s still a “big risk” of a double-dip recession.

Allan Meltzer, a political economy professor at Carnegie Mellon University, also told Reuters that the flood of money the Fed and Treasury have injected into the banking sector and economy since the crisis began will soon threaten the dollar.

“Will the Chinese continue to buy the trillions of dollars worth of debt that the Treasury intends to put out every year? We don’t know, but if not, the pressure will be on the Fed to keep buying it, and my guess is that’s going to be inflationary over the next couple of years, and the dollar will suffer,” he said.

Aug 24 (Reuters)

U.S. S&P 500 equity futures were down 0.7 percent , which increased demand for those currencies which typically gain in times of risk aversion and weighed on higher risk currencies such as the Australian dollar.

Sterling pared earlier steep losses, however, after Bank of England minutes showed policymakers voted unanimously to maintain their quantitative easing target.

Analysts said Federal Reserve Chairman Ben Bernanke on Tuesday dented sentiment when he said U.S. interest rates would stay low for some time.

“The dollar has found a bit more of a stable footing, which is largely a function of what Bernanke said yesterday,” Bank of Scotland Treasury market economist Kenneth Broux said.

“There is no reason for the Fed to hasten its way out of QE, which should dampen some of the recent excitement on equity markets,” he added.

By 1208 GMT, the euro fell 0.5 percent to 132.55 yen , while it dipped 0.1 percent against the dollar at $1.4200 .

Traders reported hefty options activity in euro/dollar at $1.4200, set to expire later in the day. A holder of a digital option will get payout if spot is above $1.4200 at expiry, while other expiries at $1.4200 are thought to total 1 billion euros, market participants say.

On Tuesday the euro hit a seven-week high on Tuesday at $1.4278 , close to its peak for the year.

The dollar fell 0.3 percent against the yen to 93.36 yen .

Reaction in the euro was limited, however, after data showed euro zone industrial orders data unexpectedly fell 0.2 percent in May, compared with forecasts for a 1.9 percent rise month-on-month.

“It looks not really consistent with what we had seen for the euro area…so I have some doubts if we do not see a substantial revision of this May reading at a later stage,” said Juergen Michels, economist at Citigroup.

STERLING OFF LOWS

Sterling fell 0.2 percent against the dollar to $1.6410 , well above an earlier low around $1.6311.

The minutes from the Bank of England’s latest policy meeting showed a 9-0 vote to maintain the 125 billion pound asset-buying total and keep interest rates at 0.5 percent.

The market took this as a signal that UK quantitative easing could be at or near an end — suggesting the economy may be starting to recover — and sterling gained as a result.

“The MPC minutes should be bullish for sterling,” Bank of Scotland Treasury’s Broux said.

The Australian dollar fell 0.4 percent against the dollar to $0.8154 and by 0.4 percent against teh yento 76.14 , dented as oil prices fell below $65 per barrel.

“Levels look quite stretched for these big gainers,” said Lee Hardman, currency economist at Bank of Tokyo-Mitsubishi UFJ.

Investors awaited further comments from the Fed’s Bernanke later on Wednesday, this time before the Senate Banking Committee.

Bernanke will repeat his testimony before the Senate Banking Committee at 1400 GMT, and then take questions

July 22 (Reuters)

U.S. employers cut far more jobs than expected last month and the unemployment rate hit 9.5 percent, the highest in nearly 26 years.

While analysts caution that jobs data is a lagging indicator and unemployment can still rise when the economy is turning around, it was enough to prompt investors to reduce their risk assets especially before a long weekend in the United States.

Furthermore, signs of a recovery in the euro zone’s dominant service sector took a backwards step in June with the final services purchasing manager index coming in at 44.7 in June, down from May’s seven-month high of 44.8.

This marks the thirteenth consecutive month the index has been below the 50.0 mark that divides growth from contraction.

“Payrolls were a wake up call,” said Jacques Henry, analyst at Louis Capital Markets, in Paris.

“The data showed that the economic recovery remains fragile and more downbeat data is to be expected, particularly on the jobs front. Stocks are ripe for a consolidation period.” MSCI world equity index fell 0.2 percent on the day, having hit the 1-1/2 week low earlier.

The pullback comes after the MSCI world equity index rose more than 21 percent in the second quarter, its biggest ever quarterly gain in its 21-year history.

“The equity rally hasn’t ended, but it is moving into a new phase. We’re moving from a period of very cheap equities and extreme risk aversion into one where equities are more fairly valued,” Bill O’Neill, portfolio strategist at Merrill Lynch Global Wealth Management, said in a note to clients.

“Future advances will be driven by earnings upgrades, rather than the recovery of investor demand that we have seen over the past few months.”

The FTSEurofirst 300 index was down 0.4 percent, led by mining shares. while emerging stocks were steady on the day.

U.S. markets are closed for a holiday on Friday.

U.S. crude oil fell 0.3 percent to $66.53 a barrel.

After the employment report, U.S. short-term interest rate futures jumped, trimming chances of rate hikes from the Federal Reserve this year.

“The BLS (Bureau of Labour Statistics) sprayed weed killer on our green shoots,” RBS said in a note to clients.

“Weaker-than-expected payrolls were a dose of grim reality for financial markets and expectations of US rate hikes and general optimism in markets can correct further.”

The September bund futures fell 11 ticks.

The dollar rose a quarter percent against a basket of major currencies while the euro rose 0.4 percent to $1.3997 .

LONDON, July 3 (Reuters)

Some traders booked profits on the euro’s slide on Thursday, while analysts said currency movements were aggravated due to thin volumes as U.S. markets were closed for the Independence Day holiday.

On Thursday, data showed U.S. employers cut a greater-than-expected 467,000 jobs in June, leading to heightened risk aversion on the back of pessimism about the recovery of the U.S. economy.

The bleak data pressured the euro and currencies perceived to be higher risk such as the Australian and New Zealand dollars, but the single European currency found its footing on Friday after selling subsided.

This kept the euro hovering at the $1.40 level, as some market players judged the sell-off in the euro — which knocked it from a near three-week high around $1.42 hit earlier in the week — may have been overdone.

“The big drift downwards that we saw (on Thursday) was simply stop-loss selling and that has now unwound,” said Robert Minikin, senior currency strategist at Standard Chartered in London.

He added a slight recovery in the euro versus the yen after a 2 percent fall on Thursday indicated lower risk aversion.

At 1217 GMT, the euro was at $1.4006, up 0.5 percent from U.S. levels at 2130 GMT. On Thursday, the pair fell as low as $1.3927, its lowest since June 25.

The euro also recovered against the yen to trade up half a percent at 134.39 yen. The Australian dollar climbed 0.7 percent against the dollar to $0.7983, while the New Zealand dollar rose 1 percent at $0.6333.

The dollar index, which tracks the dollar’s value against a basket of currencies, was up slightly at 80.290.

DIVERSIFICATION DEBATE Earlier in the session, the euro showed little reaction to data showing the euro zone Services Purchasing Managers Index (PMI) in June stood at 44.7, down from May’s seven-month high of 44.8.

Separate figures showed euro zone retail sales fell 0.4 percent on the month in May, more than forecasts for a 0.1 percent slide.

With the U.S. non-farm payrolls out of the way, investors will likely focus on a Group of Eight (G8) meeting on July 8-10 for any further debate on currency diversification plans.

A Japanese official said on Friday major countries should support the dollar as the key international currency at the summit, although emerging nations may discuss a new global reserve currency on the sidelines.

China has asked for a debate on a new global reserve currency when leaders from the G8 meet with the G5 emerging economies next week in Italy, a G8 source told Reuters.

“In the short term, moderate USD strength is likely to be in the global interest in terms of keeping long-term rates down and relieving what may emerge as commodity price pressures on inflation down the road,” Barclays Capital Research said in a note to clients.

“So while it may be early to sell USD, the fact that the (diversification) discussion has become so public suggests that USD weakness would accompany a global recovery as confidence is restored in the medium and long term,” the note said.

LONDON, July 3 (Reuters)

In the latest sign the economy of the world’s top consumer was still struggling, data on Thursday showed U.S. employers cut 467,000 jobs in June and the jobless rate rose to a 26-year high. Euro zone unemployment climbed to a 10-year high.

Euro zone economic sentiment improved more than expected in June, data showed on Monday, as the European Commission predicted the worst could be over for the 16-country currency area.

“The ECB will find themselves affirmed that the economy is bottoming out and that the worst is over,” said Joerg Angele, analyst at Bayerische Landesbank.

“It’s bad, but it’s not getting worse.”

The FTSEurofirst 300 index rose 1 percent, led by energy companies and financials.

The MSCI world equity index edged up 0.12 percent towards 12-day highs hit on Friday. However, the index is down over 4 percent from the year’s highs set earlier this month.

U.S. stock index futures indicated a slightly higher open on Wall Street.

World stocks have shuffled sideways in the past few weeks as investors have questioned how quickly the global economy will return to growth, giving a boost to battered government bonds and pushing yields lower.

U.S. employment data are due on Thursday ahead of a U.S. holiday on Friday, and the European Central Bank and Sweden’s Riksbank issue policy statements this week.

“With the payrolls coming up, and the ECB and Riksbank, I don’t think there’s a great appetite to take on big risk this week,” said Maurice Pomery, managing director of Strategic Alpha.

Many investors are also sticking to the sidelines as the second quarter winds down and ahead of U.S. and European summer holidays.

CHINA WATCH

The dollar index, a gauge of its performance against six major currencies, dipped 0.05 percent to 79.833, but held off a two-week low struck on Friday.

The euro inched up 0.07 percent to $1.4059 , recouping losses earlier in the session, and the dollar was up 0.16 percent against the yen at 95.35 .

The dollar fell last week after China, which holds nearly $2 trillion of reserves believed to be concentrated in dollars, repeated its calls for an end to the dominance of a single currency in global finance.

China and Brazil said on the sidelines of a weekend meeting of central bankers in Basel they were discussing a currency arrangement to allow exports and importers to settle deals in local currencies, thereby avoiding the dollar.

Pressure from emerging market countries to seek an alternative to the dollar as reserve currency has contributed to weakness in the U.S. currency in recent weeks.

Crude oil rose 0.74 percent to $69.89 a barrel on supply concerns after Nigeria’s main militant group said it attacked a Royal Dutch Shell oil platform.

Euro zone government bond futures rose 20 ticks , helped by strong gains in UK gilts on month-end buying and weak UK data.

LONDON, June 29 (Reuters)

Although it’s difficult to believe, the Irish economy soared even higher than the U.S. economy during the boom years… and has fallen even further. (It even managed a higher debt-to-GDP than the U.S.) Now, just like poor old Icarus, it’s paying the price for its lofty heights.

“The contraction of the Irish economy is the worst anywhere since the Great Depression. Well, not anywhere, anywhere among the industrial countries since the Great Depression. You have to allow for countries like Zimbabwe,” said Alan Barrett of the think tank the Economic and Social Research Institute recently

The contraction in Irish GDP will be a – 9.2% this year. And the county is looking at a total contraction in GDP of – 14% over 2008 to 2010. Nowhere else in the developed world is expected to see such dramatic shrinkage of output over the same period.

The contraction in Britain this year is set to be – 3.7%… in Germany – 5.3%… France – 3.3%… in the euro zone – 4.1 %… in Japan – 6.6%… in the U.S. – 4%… and in Ireland 9.2%… Quite an achievement, don’t you think.

Once the land of entrepreneurial spirit and “Celtic Tiger” dynamism, Ireland, too, has succumbed to the anti-wealth zeitgeist. And the buffoonery back home isn’t only the domain of politicians. Media commentators have gotten in on the game.

Here’s a good example from one the nation’s most popular commentators, Vincent Brown, writing in the conservative national daily The Irish Times (emphasis added).

Not many of the ultra rich will experience unemployment and it is evident the Government is shaping up to cut social welfare payments in the December budget. No one mentioned the Sunday Times rich list and how the top names on that list have been faring. Not too well, indeed, but not too badly either. Poor Seán Quinn lost €1 billion, now down to just €2.55 billion. Denis O’Brien is down around €240 million to just €1.9 billion. Dermot Desmond lost a mere €12 million, however, down to €1.56 billion. I did an analysis of the 50 top names on this list – people who live in the Republic, plus the notorious tax exiles. I reckon that the combined wealth of this 50 is €19 billion, an average of €382 million each.

Suppose we put a wealth tax of, say, 10 per cent on this 50: it would give us almost €2 billion. These guys and gals having to pay out on average €38 million out of their average of €382 million is not asking a lot, is it? There would be a little difficulty in trying to corral these wild geese and, no doubt, a few more of the earls would depart or pretend to. But we could probably nail most of them and most of another 150 or so of the rich boys and maybe get around €3 billion a year from them. After all, they got it from us (it is not possible for anybody to make wealth outside society; it is social co-operation that generates all wealth, and society, therefore, has an entitlement to determine how the proceeds of that social co-operation should be divided).

See what I mean, dear reader? You can run, but you can’t hide.

Gold was at $919/921 an ounce at 1242 GMT, down from $937.15 late in New York on Monday, when it fell more than 1 percent as investors moved away from safe-haven investments.

World stocks hit five-week highs on Monday as investors pocketed riskier assets on growing optimism that a U.S. plan to purge toxic assets from the balance sheet of banks could ease the misery of the financial sector.

“Sentiment (on gold) is a bit weaker off a perceived improvement in other forms of asset classes,” said Michael Khosrowpour, an analyst at Triland Metals, pointing to overnight gains in stock markets and gains in the dollar.

The U.S. plan helped boost Japan’s Nikkei average to a 2-1/2 month closing high on Tuesday. But European stocks dipped, breaking a three-day winning streak after euro zone and UK macro data showed job losses and higher inflation.

Traders said markets were watching out for testimony before Congress by Fed Chairman Ben Bernanke and U.S. Treasury Secretary Geithner at 1400 GMT.

Analysts said fears of inflation fanned by the Federal Reserve’s plans to buy long-dated U.S. Treasuries still lingered even if they had eased a little.

“Gold will probably continue to follow inflation expectations in the near term although remains vulnerable to improved risk asset sentiment,” UBS said in a note.

Analysts also said a higher dollar was putting pressure on gold prices.

Gold is often viewed as an alternative to holding the dollar, and often falls when the dollar rises because it makes metals priced in the U.S. currency more expensive for holders of other currencies.

Bullion has recovered ground from a six-week low of $882.90 marked on March 18 but still has some way to go before approaching the 11-month high above $1,000 reached in February.

It soared to an all-time peak of $1,030.80 in March 2008.

Receding interest in gold was also evident in the holdings of gold-backed exchange traded funds.

The world’s largest gold-backed ETF, the SPDR Gold Trust , said its holdings nudged down about a third of a tonne to 1,114.29 tonnes on March 23 from a record high 1,114.60 tonnes.

Silver was at $13.36/13.42 from $13.63, platinum was at $1,109/1,119 from $1,121, and palladium was at $203/208 versus $207.5.

March 24 (Reuters)