Speculation the European Central Bank might be about to cut interest rates pushed the euro lower against the dollar on Monday while shares in Europe edged up with eyes on key U.S. economic data later in the week. A newspaper report, denied by Japanese authorities, that Japan's intervention to curb the yen's gains had officially ended pushed the currency higher. Oil fell on scepticism OPEC would go ahead with planned production cuts. With growing doubts in investors' minds about the strength of economic recovery, many in markets are speculating the ECB will cut the cost of borrowing at its meeting on Thursday. The following day, the U.S. Labor Department releases keenly awaited jobs data for March. Surprisingly weak payrolls growth figures for February led markets to push back their expectations of higher U.S. interest rates. "This is a big week from a macro point of view and there will be a lot of uncertainty ahead of the ECB meeting on Thursday and the U.S. payrolls data on Friday," said Nigel Cobby, managing director of European equities at JPMorgan. European shares edged up as investors looked ahead to the data later in the week. The FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was 0.28 percent higher while the narrower DJ Euro STOXX 50 index <.STOXX50E> ticked up 0.15 percent.
Worries the ECB might cut rates pushed the euro down to its lowest level this year against the dollar and a four-month low against the yen. "It's our view that (the ECB) will cut in September by 50 basis points but the risk to that is that it happens sooner rather than later," said Aziz McMahon, currency strategist at ABN AMRO. A story in The Times of London, citing Bank of Japan sources, said Tokyo's intervention campaign had "officially" ended. This sent the yen to six week highs on the dollar before the Ministry of Finance (MOF) reminded markets it controls currency policy and would continue intervening as needed. The euro was last at $1.2123, off a low of $1.2050. The dollar was at 105.79 yen . In government bond markets, the interest rate sensitive two year Schatz yield was at 2.04 percent, down 1.2 basis points but above nine-month lows hit last week below two percent. The benchmark 10-year Bund yield was up 0.9 basis points at 3.91 percent. Tokyo's benchmark Nikkei share index ended lower after three sessions of gains as investors became nervous and took profits on builders and steel makers. The yen's rise against the dollar also weighed on exporters such as Sony <6758.T>. The Nikkei <.N225> fell 0.45 percent and the broader TOPIX index <.TOPX> closed up 0.24 percent. "Overall market sentiment is still firm but caution started emerging and short-term investors were seen starting to cash in profits," said Hiroyuki Nakai, chief strategist at Tokai Tokyo Securities. U.S. stocks fell on Friday as investors locked in profits.
The tech-heavy Nasdaq <.IXIC>, which had its biggest gain in nine months last Thursday, fell 0.36 percent. The Dow Jones Industrial average <.DJI> edged down 0.06 percent. U.S. stock index futures were slightly higher, pointing to a mildly positive start on Wall Street later. Brent crude oil for May was down 38 cents a barrel at $31.61 on scepticism OPEC would go ahead with its planned one million barrels a day output cut from April 1.///