LONDON, Jan 23 - The euro nosed to within 1-1/2 cents of record highs against the dollar on Friday as the market looked for clues that policymakers plan to cap the currency, while European bourses ignored a positive lead from Asia. European government bond yields slipped, aided by the firmer euro and gains in U.S. Treasury bond prices. Safe-haven gold rose as the dollar fell, but gains were curbed by Germany's announcement on Wednesday it wants to sell 600 tonnes of its bullion reserves. Crude oil prices dropped after Saudi Arabia's oil minister said he favoured lower prices. Comments by European Central Bank chief economist Otmar Issing in Davos on Thursday kept the dollar on the back foot on Friday. Issing did little to suggest the ECB is poised to curb the recent rise in the single currency, leaving the market to test at what point the central bank will flinch. "The ECB haven't really given any clue that they could cut rates or intervene," said Peter Fontaine, currency strategist at KBC in Brussels. "People don't see them intervening before $1.30 so they're calling their bluff." By 1045 GMT the euro had reached its highest in just over a week at $1.2775 before settling around $1.2750, up a third of a percent on the day. It hit an all-time high of $1.2898 last week. The dollar was struggling at 105.90 yen , steady on the day.
STOCKS UNDER PRESSURE
Technology stocks put European bourses under pressure. Investors fretted prices may peaked at least for now, a view reinforced by Microsoft's near three percent fall after hours in New York on lower second quarter net profit. By 1045 GMT, the FTSE Eurotop 300 index <.FTEU3>, an index of pan-European blue chips, was flat at 995 points. The narrower DJ Euro Stoxx 50 index <.STOXX50E> was up 0.2 percent at 2,897 points. Earlier Japan's Nikkei Index <.N225> ended up 0.62 percent at 11,069 with an index of pan Asian shares outside Japan <.MSCIAPJ> up 0.36 percent. Wall Street looked set for a positive opening on Friday after a mixed performance the day before. On Thursday the Nasdaq Composite Index <.IXIC> lost 23.44 points, or 1.09 percent, to finish at 2,119.01. The Dow Jones industrial average <.DJI> was little changed at 10,623.18 points. European government bond yields fell to one week lows bolstered by the euro's rise and price gains in U.S. Treasuries. At 1045 GMT, the benchmark 10-year Bund yield was down 2.9 basis points at 4.10 percent. The two-year Schatz yield was down 1.7 basis points at 2.35 percent after hitting a one-week low of 2.34 percent. Gold was up as the dollar fell to stand at $411.20/$412 against its New York close at $409.20/$409.80. Crude oil futures fell 4.0 cents to $31.07 a barrel.//