LONDON, Jan 21 - The dollar extended its losses on Wednesday with investors unconvinced by the European Central Bank's attempt to talk down the single currency, while European shares inched up after a mixed day in Asia and on Wall Street. European government bonds yields were flat, supported by the euro, safe-haven gold failed to profit from the slide in the dollar and crude oil futures dipped after eyeing 10-month highs. Currency markets once again dominated investors' attention as the unloved dollar slipped again against the euro after suffering its biggest one-day fall against the single currency in eight months the day before. "Euro zone finance ministers have warned consistently about currency volatility but current levels appear to be no major concern," said Mitul Kotecha, head of global foreign exchange research at Credit Agricole Indosuez. Tuesday's two-cent hammering against the euro was sparked by a joint statement by euro zone finance ministers and ECB President Jean-Claude Trichet which voiced concern about currency market volatility, but failed to outline steps to curb the pace of the euro's recent rally.
By 0945 GMT the euro up around half a percent up against the dollar at $1.2639 , coming back within sight of record peaks near $1.29 scaled early last week. The dollar was down around a quarter of a percent at 106.77 yen with wariness of Japanese intervention capping losses.
STOCKS, BONDS
European shares were a shade higher on Wednesday after a mixed performance in Asia and on Wall Street overnight. Crude prices near 10-month highs helped oil stocks, but telecoms equipment firms were bruised by results from U.S. rival Motorola which disappointed on mobile phone sales despite posting a higher than expected fourth-quarter profit. By 1025 GMT, the FTSE Eurotop 300 index <.FTEU3> was up 0.3 percent at 991 points. The DJ Euro Stoxx 50 index <.STOXX50E> was up 0.3 percent at 2,868 points. Earlier Japan's Nikkei <.N225> index dipped 0.91 percent to stand at 11,002 points as investors took profits on blue-chip stocks. Elsewhere in Asia shares were broadly higher with a broad index of the region's stocks <.MSCIAPJ> up 0.57 percent. Wall Street stock futures pointed to negative start to trading after a mixed day on Tuesday. The Dow Jones <.DJI> lost 0.68 percent, ending at 10,528.6, but the tech heavy Nasdaq <.IXIC> pushed on to new 2-1/2 year highs buoyed by software and technology shares. European government bond yields were flat. At 1015 GMT, the two-year Schatz yield was unchanged at 2.38 percent with the benchmark 10-year Bund yield down 0.8 bps at 4.14 percent. "Everyone is just watching the euro and the euro will lead the way," said Charles Berry, trader LBBW. Euro zone final December inflation data will be released at 1100 GMT with U.S. December housing starts due at 1330 GMT. Crude oil prices dipped slightly despite Tuesday's blast at a liquefied natural gas plant in Algeria and concerns over low U.S. oil stocks. March Brent crude was down 11 cents to $31.12. Safe-haven gold was a touch lower at $411.25/$412.00 against its New York close of $412.25/$412.75.//