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 The U.S. dollar gained across the board on expectations of higher
interest rates, pushing the euro down to a four-week low and
weighing on gold.
Wall Street looked set to open lower, according to stock index
futures <SPc1>. Asian shares, by contrast, rose on expectations of
fresh stimulus for the Chinese economy.
Chinese shares hit seven-year highs even after data showed exports
fell 15 percent year on year in March while imports contracted at
their fastest rate since May 2009. Economists had forecast a 12
percent increase in exports.
"The export-based economy is in a process of structural changes and
most of the efforts are focused on consumption, and given that the
numbers released today are appalling, you want to ask if the global
growth slowdown is casting its shadow," said Naeem Aslam, chief
market analyst at Ava Trade in Dublin.
The Australian dollar fell nearly 1.5 percent after the data from
China, the main market for its exports of natural resources.
The Aussie <AUD=> was last down 1.3 percent at $0.7567, its weakest
since April 2. The China-exposed New Zealand dollar <NZD=> fell 1.4
percent to $0.7574.
The Chinese data also weighed on sentiment in Europe. Britain's FTSE
100 index slipped from record highs as heavyweight miners, including
BHP Billiton, Anglo American and Rio Tinto, fell.
The pan-European FTSEurofirst 300 share index .FTEU3>, which touched
its highest level since 2000 on Friday, was up less than 0.1 percent
by midday.
In Asia, MSCI's main index of Asia-Pacific shares outside Japan rose
0.6 percent, heading back towards its highest since September,
reached last week.
China's CSI300 index closed 1.8 percent higher while the Shanghai
Composite rose 2.2 percent.
"We continue to expect more monetary easing for a variety of
reasons, and the trade data offers further support for this," Oliver
Barron, analyst at China-focused investment bank NSBO said in a note
to clients.
Tokyo's Nikkei 225 index ended flat in choppy trade as investors
took profit on gains in major stocks such as Toyota Motor Corp after
the index hit 20,000 last week.
EURO DOWN
The euro was down 0.7 percent at $1.0530, a four-week low. Data on
Friday from the Commodity Futures Trading Commission showed
speculative investors' short euro positions, or bets the single
currency will weaken, were only slightly below the previous week's
record high.
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The European Central Bank is one month into a 19-month
asset-purchase program, helping weaken the euro, while the Federal
Reserve is expected to raise rates this year.
The dollar index, which measures the greenback against a basket of
currencies, rose 0.6 percent. The dollar was up 0.4 percent against
the yen at 120.63 yen.
"It's more a question of dollar strength today than anything else,"
said Keng Goh, a currency strategist at RBC Capital Markets in
London.
San Francisco Fed President John Williams told Reuters that as the
U.S. job market improves, the risk of an unexpected setback
derailing the recovery once the Fed raises rates is receding.
Sterling hit a fresh five-year low, under pressure from Friday's
weaker-than-expected UK industrial output data and concerns about
political uncertainty after next month's British general election.
In fixed income markets, Italian yields edged up after the sovereign
sold 7.5 billion euros of bonds, kicking off the busiest week of
euro zone debt sales in almost a year. Italy's 10-year yields rose
1.5 basis points to 1.24 percent, but were still close to a record
low of 1.03 percent.
The ECB program has pushed euro zone government bond yields lower,
with German 10-year yields hitting a record low of 0.14 percent last
week. Germany will sell 10-year bonds on Wednesday.
Crude oil prices rose as traders bet a slowdown in U.S. drilling
would contribute to higher prices. Brent crude were last up 49 cents
at $58.36 a barrel.
The stronger dollar and prospects of higher U.S. interest rates
helped push gold lower for the fourth session in five. It last
traded at $1,199.42 an ounce, down 0.8 percent.
(Additonal reporting by Jemima Kelly in London, Blaise Robinson in
Paris and Lisa Twaronite in Tokyo; Editing by Catherine Evans)
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