Global shares, dollar fall day before Bernanke testimony

Tue Jul 16, 2013 4:26pm EDT
 
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By Herbert Lash

NEW YORK (Reuters) - The dollar eased and U.S. stocks fell on Tuesday, snapping an eight-day advance by the benchmark S&P 500 index, as investors took a cautious stance ahead of the Federal Reserve chief's testimony to a U.S. congressional panel on Wednesday.

Analysts expect Fed Chairman Ben Bernanke to reiterate previous remarks that U.S. monetary policy will remain accommodative. But investors will look for clues as to when the U.S. central bank might start reducing its bond-buying program.

The dollar's weakness against the euro was curbed by data showing an unexpected fall in German investor sentiment in July and subdued euro zone inflation which added to expectations the European Central Bank also will keep rates low to aid the region's recovery.

U.S. stocks initially traded near break-even, but later fell in tandem with a sharper decline in European stock markets.

The euro rose 0.70 percent to $1.3153, recovering from a level of $1.3057 struck after the German ZEW survey of investor sentiment. Against the yen, the dollar lost 0.71 percent to 99.14 yen.

The dollar fell late last week after Bernanke said highly accommodative monetary policy would be needed for the foreseeable future. Bernanke's remarks on the U.S. economy and monetary policy will be released at 8:30 a.m. (1230 GMT) on Wednesday.

"Bernanke will be a dove in his testimony and it will continue to surprise me that it is actually not fully priced in," said Sebastien Galy, foreign exchange strategist at Societe Generale in New York.

The Dow Jones industrial average .DJI closed down 32.41 points, or 0.21 percent, to 15,451.85. The Standard & Poor's 500 Index .SPX fell 6.24 points, or 0.37 percent, to finish at 1,676.26. The Nasdaq Composite Index .IXIC slid 8.99 points, or 0.25 percent, to close at 3,598.50.   Continued...

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