Dollar Holds Tough Against Euro
The dollar mostly held on to recent gains against the euro Monday, with traders worried that European authorities might intervene to weaken their currency.
European blue-chip stocks were subdued, on fears over the bidding war for AT&T; Wireless Services Inc. Britain’s Vodafone Group and Atlanta-based Cingular Wireless both boosted their bids to $38 billion Monday, according to sources.
With U.S. markets closed for the Presidents Day holiday and no major European economic data due, markets there were generally quiet.
The euro’s fall against the dollar Friday fanned speculation the European Central Bank may have been behind the move, although analysts were skeptical and said the decline may have reflected profit taking before the long U.S. holiday weekend.
The euro ended in New York at $1.274 on Friday, compared with $1.28 on Thursday. It was trading around $1.277 on Monday in foreign markets.
In stock trading, European blue-chip indexes were modestly higher. The main German stock index added 0.3%, the French index rose 0.8% and the Swiss market was up 0.2%.
But Britain’s FTSE-100 index eased 0.1%, led down by Vodafone, which lost 2.6%. Vodafone bonds also were hit.
“People are waiting to see how much stock and cash there is in their bid,” said one telecom bond trader in London. “I think news on bidding will leak out over the next week or so. Raising the bid is ultimately bad for Vodafone.”
French drug maker Sanofi-Synthlabo was up after a better-than-expected rise in 2003 net income, on the eve of the formal launch of a hostile bid for rival Aventis.
In Tokyo, the Nikkei stock index ended flat as the strong yen left some investors wary of bidding for shares of technology companies and other exporters. The yen was holding near Friday’s level of 105.5 to the dollar.
Cosmetics and textiles maker Kanebo fell nearly 15% after it quit talks on selling its cosmetics division.
The Nikkei closed down 0.1% at 10,548. The broader TOPIX index rose 0.4%.
The U.S. market starts the week with the Dow Jones industrial average at 10,627.85. It lost 66.22 points, or 0.6%, on Friday after a report on a key measure of consumer confidence showed a surprising drop.
The technology-dominated Nasdaq composite fell 20.05 points, or 1%, to 2,053.56 on Friday.
Nasdaq has fallen for four consecutive weeks. The Dow has risen for two weeks.
In commodity trading Monday, crude oil was little changed in London, holding near a two-week high, on expectations that reduced OPEC production may restrict efforts to replenish below-normal U.S. fuel inventories.
“The gasoline situation is concerning a lot of traders,” said Keith Pascall, a broker at GNI Ltd. “Both crude and gasoline stocks are very low and it’s hard to see how the situation will be rectified if OPEC goes ahead and carries out these cuts.”
The Organization of the Petroleum Exporting Countries agreed last week to cut crude oil output, even as U.S. crude oil reserves dropped to a 28-year low last month.
Saudi Arabia plans to lower oil output by more than 300,000 barrels a day in March to meet the group’s accord, said a Persian Gulf official familiar with the nation’s oil policy.
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Associated Press and Bloomberg News were used in compiling this report.
