* Political uncertainty pushes gold to three-month high
* Euro weakens vs dollar, options show big bias for weaker
* French bond yield spread over Germany widest since late
* Wall St dips after stocks gain in Europe and Asia
* Oil rises despite rise in crude oil inventories in EIA
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
(Updates dateline, byline; adds Wall Street open; updates
By Hilary Russ
NEW YORK, Feb 8 Political uncertainty ahead of
European elections gave nervous investors a reason to sell the
euro and kept French government debt under pressure on
Wednesday, while the price of safe-haven gold hit three-month
Wall Street stocks opened lower, weighed down by losses in
the banking and healthcare sector, and European share prices
turned negative, while oil recovered after a surprise draw in
The Dow Jones Industrial Average was down 39 points,
or 0.19 percent, to 20,051.29 late morning in New York. The S&P
500 lost 0.66 points, or 0.03 percent, to 2,292.42 and
the Nasdaq Composite added 2.84 points, or 0.05 percent,
Three months before the final round of France's presidential
election, investors are concerned about the strong showing of
far-right candidate Marine Le Pen, who has promised to take
France out of the euro zone and to hold a referendum on European
Euro zone government bond yields fell broadly, though French
debt lagged the rest with 10-year yields falling
three basis points to 1.1 percent but remain not far off the
17-month highs touched on Monday. Low-risk German equivalents
fell 5.4 bps to 0.31 percent, a two-week low.
This pushed the spread between the two yields at one point
to more than 78 bps, its widest since November 2012, a move that
was also fuelled by expectations that the European Central
Bank's bond-buying stimulus scheme has peaked.
"If you step back, the big picture still remains - that of
political concerns in Europe concomitant with speculation over
ECB tapering," said Rabobank's head of rates strategy Richard
The premium investors demand to hold low-rated Italian
10-year bonds rather than German Bunds hit its highest since
Apart from German debt, investors also bought gold, which is
seen as a safe investment. Spot gold hit a three-month
high of $1,244.67 an ounce.
The euro was down another 0.1 percent to $1.0688
after a sharp fall on Tuesday.
U.S. crude oil was up 0.84 percent, or 44 cents, at
1605 GMT. Brent was higher by 1.00 percent, or 55 cents
at $55.61 after news of a large rise in inventories in the U.S.
Energy Information Administration data saw prices initially fall
"The crude oil inventory build was really terrible for the
market but the market does not seem to care because the products
inventories were better than expected and are dragging crude oil
prices up with it," said Andrew Lipow, president of Lipow Oil
Associates in Houston.
The U.S. dollar, whose predicted path higher has been
interrupted lately by uncertainty over U.S. President Donald
Trump's economic policies, ticked up 0.03 percent against a
basket of other major currencies.
Investors are still waiting to see whether Trump makes good
on his campaign pledges to cut taxes and boost spending.
"Markets know that if Trump was to come out and start
talking about tax reform and infrastructure spending, the dollar
would go up. The dollar rose a long way at the end of last year,
it has come back, now we are sitting around waiting for the next
steer," said Gavin Friend, a strategist with National Australia
Bank in London.
For Reuters 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 Nigel Stephenson and Ahmad Ghaddar in
London, Yashaswini Swamynathan in Bengaluru, and Scott Disavino
in New York; Editing by Catherine Evans and Clive McKeef)