European, Asian Stocks Slip; Dollar Up vs. Yen

Most European and Asian stock markets fell on Monday on renewed concern over the prospect of higher U.S. interest rates, while the dollar touched six-month highs against the yen.

Still, foreign markets’ losses were mild compared with the near-3% drop in the Dow Jones industrial average Friday, to 10,219.52.

U.S. markets were closed Monday in observance of Presidents Day. Trading resumes today.

In foreign trading, Federal Reserve Chairman Alan Greenspan’s warning last week that rates will have to rise substantially to cool a robust U.S. economy supported the dollar, while worries over the pace of Japan’s economic recovery weighed on the yen.

By early today in Asia, the yen fell to a six-month low against the dollar, to 111.73 yen, from 110.96 in New York on Friday.

Tokyo’s Nikkei-225 stock index was down modestly early today after falling 245.28 points, or 1.2%, to 19,543 on Monday.

In Hong Kong, the Hang Seng index slid 1.7% to 16,322 on Monday.

In Europe, Britain’s FTSE-100 index fell 1.4% on Monday, while Italian stocks lost 1.6% and the French market fell 1.6% as well.

But Germany’s DAX stock index inched up 0.2% to 7,590.53 after falling as low as 7,447.

In Latin America, the Mexican market’s IPC index fell 0.4% to 7,314.97. But Brazil’s Bovespa index rose 0.4%.

On Wall Street this week, a key concern is whether tech stocks can continue ignoring the Fed’s saber-rattling about interest rates.

Part two of Greenspan’s testimony before Congress at mid-week will give him another opportunity to warn of the Fed’s intentions.

Technology may still deliver fat gains as interest rates move up, Wall Streeters say. But they also warn that there will come a time when increasing lending costs will force Corporate America to cut back on capital spending, hurting highfliers such as computer and software makers.

“As investors digest the Greenspan news, the question is at what point do they believe technology stocks will be affected by higher interest rates,” said George Rodriguez, senior vice president at Guzman & Co. in Jersey City, N.J.

In fact, the Nasdaq composite index, which features some of the biggest names in tech, last week finally showed signs of caving in to interest rate pressures. On Friday, the index slid 137 points, or more than 3%, to 4,411.74.