U.S. deadlock drags on dollar, stocks put up a fight

Thu Oct 3, 2013 8:34am EDT
 
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By Marc Jones

LONDON (Reuters) - The dollar hovered at an eight-month low on Thursday as the U.S. government shutdown dragged on, though stocks drew comfort from the view that major central banks may now have to keep monetary policy super-loose for longer.

Solid euro zone data and an upbeat survey on China's huge services sector also lifted sentiment, which helped offset some disappointing manufacturing figures earlier in the week.

Markit's euro zone services Purchasing Managers Index, a monthly survey of businesses, rose to 52.2 in September from August's 50.7, while retail sales in the bloc posted their second robust monthly rise on the trot.

That left the euro pushing a new 8-month high against the dollar, which was sapped by the lack of progress in U.S. budget talks.

Wall Street was expected to open lower, with stock futures indicating falls of around 0.2 for the S&P 500 and Dow Jones industrial, raising the prospect of a ninth session in eleven in the red for both indexes.

World stocks .MIWD00000PUS were holding up overall however. Asian shares ex-Japan ended 0.1 percent higher and European stocks hovered unchanged at mid-session as London's FTSE .FTSE helped offset weakness in Paris .FCHI and Madrid .IBEX. .EU

"The U.S. fiscal uncertainty is still the main thing that is weighing on stocks," said Societe Generale strategist Alvin Tan.

On the dollar's weakness and the euro's rise, he added that a combination of factors were in play.   Continued...

 
A visitor walks past logos at the Tokyo Stock Exchange in Tokyo June 13, 2013. REUTERS/Toru Hanai