20 January 2004, 15:10  Euro pegs back dollar, European stocks flat

LONDON, Jan 20 - The euro rose against the dollar on Tuesday but fresh expressions of official concern at the pace of the single currency's rise limited its gains while European shares marked time ahead of Wall Street's opening. A surprise easing of Japanese monetary policy gave a fillip to Tokyo shares, which closed at a three-month high. Oil prices stayed high on supply worries as icy weather gripped parts of the United States. Euro zone finance ministers and the European Central Bank, meeting in Brussels, said in a joint statement they were concerned at large currency swings that have recently taken the euro to record highs against the dollar. "It's significant (the Europeans) pulled together and got a cohesive view. It's more in harmony to be saying they don't like volatility," said Paul Mackel, currency strategist at ABN AMRO in London. However, some analysts took the view the statement could have sounded tougher and the euro rose in Europe. It was last at $1.2454, up nearly one percent. The dollar also rose against the yen after the Bank of Japan increased liquidity in the banking system, a move read by markets as a sign of concern at yen strength. The dollar was last at 107.37 yen , close to a two-week high. European shares were little changed and analysts said the market was awaiting fresh direction from U.S. markets, which were closed on Monday for a holiday.
Shares in Swiss specialty chemical maker Lonza dived after a slide in profits. The FTSE Eurotop 300 index of pan-European blue chips <.FTEU3> was up 0.1 percent and the narrower DJ Euro STOXX 50 index <.STOXX50E> was up 0.09 percent. "Today is likely going to be a fairly flat trading day up until the U.S. markets begin to trade," said Tom Hougaard of spread betting firm City Index.
WALL STREET SEEN HIGHER
U.S. stock index futures were higher in Europe, indicating Wall Street would open slightly up. Tokyo stocks rose, led by gains in tech issues, although worries about overheating offset the impact of the Bank of Japan's decision to ease monetary policy. The BOJ unexpectedly raised its target for the current account deposits banks leave at the central bank to 30-35 trillion yen ($280-326 billion) from 27-32 trillion yen, meaning there will be more liquidity in the banking system. "That was soon outweighed by worries that the market's recent climb had been a little too sharp, especially for tech issues," said Ken Masuda, senior dealer at Shinko Securities. The Nikkei <.N225> ended up 0.61 percent at a three-month closing high. The broader TOPIX index <.TOPX> closed up 0.35 percent. Oil rose again as icy weather in the United States highlighted supply concerns. Brent crude for March was up 38 cents a barrel at $30.95 and U.S. light crude was up 48 cents at $35.55 a barrel. Euro zone government bond prices rose after German's ZEW institute reported investor expectations lower than expected. ZEW's expectations index fell to 72.9 in January, below a forecast of 73.0, from 73.4 in December. The two-year German Schatz note was yielding 2.43 percent, down 1.7 basis points. The yield on the 10-year benchmark German Bund was 4.16 percent, down 0.6 of a basis point.//

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