Dollar, shares rebound as U.S. data calms stimulus fears

Tue Jun 4, 2013 8:14am EDT
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By Marc Jones

LONDON (Reuters) - The dollar and global shares recovered from one-month lows on Tuesday and German Bund futures eased, after weak U.S. data calmed concerns about an early cut in central bank stimulus.

Markets were generally more settled than in recent sessions and as a lull in this week's busy schedule of central bank meetings, U.S. data and announcements on Japan's stimulus program, offered a break from recent sharp moves.

Wall Street was expected to open flat

The dollar steadied, having climbed back above 100 yen and recouped some of Monday's wider falls .DXY after the ISM index of U.S. factory activity fell to its lowest since June 2009.

The figures had helped soothe jittery markets by bolstering the view that it is still too early for the Federal Reserve to start winding down its support program. Nevertheless with such talk unlikely to go away, analysts said the market swings would continue, especially with U.S. job data due this week.

"Were are into this very volatile period which we were always going to have after such expansionary monetary policy," said National Australia Bank strategist Gavin Friend.

"Markets, in typical forward-looking fashion, are seeing the tapering as the beginning of the end of QE. You can argue that the Fed will still be buying significant quantities of bonds so markets shouldn't really react, but it is about the direction of travel."

European stocks .FTEU3.STOXX50E were off their highs of the day by the afternoon but remained 0.4 percent higher and on course to snap a two-day losing streak that had left them at their lowest level since early May. .EU   Continued...

A man walks through the lobby of the London Stock Exchange August 5, 2011. REUTERS/Suzanne Plunkett