LONDON, Dec 23 - The dollar failed to shake off its sickly hue on Tuesday ahead of the Christmas holidays as investors focused on security fears and discounted data due later that are expected to show robust U.S. growth. European stocks hovered close to their 2003 highs but took their tone from Asia where indices made little headway despite Wall Street hitting a fresh 19-month peak on Monday. With trading volumes down to a trickle on the last full trading day before Christmas, European government bond prices were little changed. After a year in which investors have had to make sense of a slew of often conflicting signals, worries about the U.S. current account deficit continued to outweigh solid evidence of a recovery in the world's largest economy, leaving the dollar bruised. With Tokyo markets shut for a holiday, currency investors balanced a heightened U.S. security alert and the possibility of intervention by the Japanese central bank against the prospect of more encouraging signs for the U.S. economy from fresh data.
"Data today will confirm robust U.S. growth, but underlying negative factors for the dollar remain in place," said Mitul Kotecha, head of global foreign exchange research at Credit Agricole Indosuez. U.S. final third quarter GDP, due at 1330 GMT, is expected to be unrevised at a healthy 8.2 percent annualised growth rate. December's final University of Michigan consumer sentiment survey, due at 1445 GMT, is forecast to be revised upwards. The dollar eased to $1.2406 per euro compared with record lows of $1.2447 set on Monday. It stood at 107.29 against the yen , just over half a yen above three-year lows set earlier this month.
STOCKS, BONDS
European stocks trod water on Tuesday in thin, pre-Christmas trade taking their cue from Asia where a broad index of shares outside Japan <.MSCIAPJ> was flat on the day. With the Japanese market closed, Asian indices ignored overnight gains on Wall Street where both the blue-chip Dow Jones industrial average <.DJI> and the broader Standard & Poor's 500 Index <.SPX> hit fresh 19-month highs on Monday. By 1018 GMT the FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was 0.2 percent higher at 946 points while the narrower DJ Euro Stoxx 50 index <.STOXX50E> rose 0.4 percent to 2,725 points. Stocks on both sides of the Atlantic have extended the powerful rally from their mid-March lows in the past few weeks on expectations an improving global economy will boost profits. European government bonds were little changed in thin trading but were buoyed by the strength of the euro. The single European currency has been a key focus recently as bond traders assess whether a strong euro will encourage the European Central Bank to leave rates on hold for some time to come. The interest rate sensitive two year Schatz yield was up 0.6 basis points on the day at 2.53 percent. The 10-year Bund yield was unchanged at 4.28 percent. Crude oil prices extended Monday's losses, triggered by warmer weather and concerns expressed by the incoming president of production cartel OPEC. February Brent crude futures were down 47 cents at $28.52. Safe-haven gold , which has risen around 18 percent this year, was flat at $410/$410.50.//