Euro scales heights, stocks lose grip on gains

Tue Dec 10, 2013 8:35am EST
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By Marc Jones

LONDON (Reuters) - The euro reached a five-year peak against the yen and a six-week high against the dollar on Tuesday, as focus grew on the dwindling spare cash in euro zone banks and the ECB's apparent lack of concern.

Stocks consolidated some of their gains of the past two days as caution took over before the Federal Reserve's meeting next week, amid talk of by some of its policymakers of scaling back its stimulus program.

Wall Street was expected to see another quiet day after the S&P 500 .SPX reached its latest record on Monday.

That was the story for Asian and European stock markets. Germany's DAX .GDAXI, France's CAC 40 .FCHI and Britain's FTSE 100 .FTSE all began to sag after some mid-morning efforts to rise. .EU

Slightly weaker-than-expected French industrial production had got the day off to a shaky start. Then the equivalent report from Italy and a small upward revision to its third-quarter GDP number lifted spirits.

That kept the euro healthy at $1.3745 after it hit its highest against the dollar since late October overnight, as well as a five-year peak against the yen.

"It is hard to say the euro will weaken unless the ECB does something," said Laurent Fransolet, an interest rate strategist at Barclays in London. "The bar for them (to carry out quantitative easing or other types of aggressive easing measures) is quite a bit higher compared to the Fed or Bank of England."

MONEY'S TIGHT   Continued...

An electronic information board is seen at the London Stock Exchange in the City of London October 11, 2013. REUTERS/Stefan Wermuth