* Dow stumbles again at 20,000
* U.S. 10-year yield hits 2-week low
* European banks weigh on stocks
By Jamie McGeever
LONDON, Dec 29 European shares, the dollar and
bond yields fell on Thursday, with traders using the quiet
holiday period to book some profit on the rise that had lifted
all three to multi-year and in some cases record highs recently.
Weakness in European financial stocks helped push broader
indices into the red, extending the slippage after soft U.S.
housing data the previous day.
The yield on 10-year U.S. Treasury notes slipped to a
two-week low, pulling the dollar to a two-week low against the
"The dollar fall was mostly due to renewed doubts about the
U.S. recovery after pending home sales dropped in November. This
is where the risk-off reversal started," said Ipek Ozkardeskaya,
senior market analyst at London Capital Group.
"This pushed the exhausted U.S. bulls to the sidelines and
triggered a sell-off in both the dollar and U.S. stocks. We're
seeing a bit of follow through in Europe today," she said.
The Dow Jones has reached record peaks in December and has
come within 100 points of the 20,000 mark on the last 11
consecutive trading sessions, seven of them within 50 points.
The yen's strength, along with a 16 percent slump in Toshiba
Corp's shares after news of potential massive
writedowns led to a downgrade of its credit ratings, saw the
Nikkei shed 1.3 percent.
Europe's index of leading 300 shares fell 0.3 percent to
1,425 points, with bank stocks down 0.8 percent
Germany's DAX was off 0.3 percent too, while
Britain's FTSE 100 eased 0.2 percent from Tuesday's record
closing high of 7,106 points.
MSCI's broadest index of Asia-Pacific shares outside Japan
was last up 0.3 percent, helping to keep global
stocks in positive territory by the most slender margin of 0.1
The pullback on Wall Street Tuesday came amid light volumes.
Wednesday was the first session when trades settle in January.
The Dow fell 0.56 percent, while the S&P 500
lost 0.84 percent and the Nasdaq 0.89 percent. Weak home
sales data were blamed for some of the selling.
U.S. bonds made a rare rally as the soft home sales report
combined with surprisingly strong demand for a sale of new
five-year Treasury notes. Yields on 10-year paper fell 3 basis
points to their lowest in two weeks at 2.48 percent.
Euro zone yields were also falling on concerns about the
strength of a rescue plan for Italian banks and normal year-end
Germany's 10-year yields hit their lowest in
seven weeks at 0.164 percent, while their discount to Treasury
yields reached the widest on record.
The widening yield gap kept the euro restrained around
$1.0450 even in the face of broad dollar weakness, after
touching an eight-session trough of $1.0372 overnight. The euro
was still up around 0.5 percent on the day.
The dollar eased 0.6 percent on the yen to 116.50,
while sterling recovered from a two-month low to trade 0.3
percent higher at $1.2263.
"Yesterday's U.S. pending home sales number disappointed.
Falling U.S. yields pushed the dollar generally lower," said
Marshall Gittler, head of investment research at FXPrimus.
In commodity markets, oil was mixed after data showed a
surprise build in U.S. crude inventories. U.S. crude fell
0.2 percent to $53.95 a barrel, while Brent was last up
0.2 percent at $56.32.
(Reporting by Jamie McGeever; Editing by Elaine Hardcastle)