* Dollar climbs after Yellen's upbeat labour market comments
* European shares steady after attacks in Germany, Turkey
* Gold down as Fed comments offset attacks' impact
* Yen slides as BOJ says to maintain loose policy
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Dec 20 The dollar climbed back towards a
14-year high on Tuesday as the yen fell after the Bank of Japan
held policy steady and fallout from attacks in Germany and
Turkey subdued the euro.
European shares were steady, with unease over the attacks
balanced by gains by bank shares and the Milan market
after Italy's government said it wanted approval for up to 20
billion euros to rescue troubled lenders.
On currency markets, risk aversion sent the safe-haven Swiss
franc to a near a six-month high versus the euro and
pushed the common currency firmly back below $1.04.
But the dollar and rising bond yields
again dominated, after the head of the Federal Reserve flagged
the strength of the U.S. jobs market in a speech to students on
That sent the greenback bouncing towards last week's 14-year
high and it was at 103.40 on the index that measures it against
other leading currencies, just short of its recent peak of
The gains were strongest against the yen which slid around 1
percent after the Bank of Japan, shrugging off the yen's recent
slump, said it would keep monetary policy loose.
"The biggest impact you see from the attacks in Berlin and
Istanbul is the Swiss franc/euro," said Societe Generale FX
strategist Alvin Tan.
"But apart from that the dollar continues to be strong after
we had some rather positive comments from Janet Yellen,"
Benchmark 10-year U.S government bond yields, which set the
bar for global borrowing costs and have been rising hand-in-hand
with the dollar over the last few months, were back above 2.58
The greenback has risen 12 percent versus the yen since
Donald Trump's surprise presidential election victory, on his
promises of increased fiscal stimulus. The win was made official
on Monday after he got the required Electoral College votes.
Modest gains for European shares came after MSCI's broadest
index of Asia-Pacific shares outside Japan had
ended down 0.2 percent as emerging markets stocks suffered their
fifth straight day of losses.
China's CSI 300 index slid 0.6 percent, on
Beijing's move to tighten supervision of shadow banking
activities and on liquidity concerns, while Japan's Nikkei
closed up 0.5 percent after the BOJ meeting.
"There was no particular surprise from the policy meeting,
but investors are happy that the economy's fundamentals are
finally rising after the BOJ expressed an upbeat view," said
Takuya Takahashi, a strategist at Daiwa Securities.
Wall Street was expected to nudge higher later having tailed
off slightly on Monday as risk aversion set in following the
deaths in Germany, the shooting dead of Russia's ambassador in
Turkey, and a gun attack in a mosque in Switzerland.
Berlin police said on Tuesday that investigators suspected a
truck that was driven into a Christmas market crowd was a
The lira rallied on relief that Moscow and Ankara struck a
unified tone after the Ankara attack, rising 0.3 percent to
3.5196 per dollar on Tuesday after falling 0.7 percent on
Monday. The rouble was steady at 61.8926 per dollar.
Safe haven gold, which rose 0.4 percent on Monday,
pulled back 0.3 percent to $1,135.06 an ounce, as the prospect
of further U.S. rate hikes outweighed political concerns.
Oil prices also eased as traders began to unwind positions
in the run-up to the holiday season. U.S. crude slid 0.4
percent to $51.91 per barrel as global benchmark Brent
slipped 0.2 percent to $54.81.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Nichola Saminather in Singapore;
editing by John Stonestreet)