* Dollar strengthens on growing Fed rate hike expectations
* FTSE hits record hit as pound slump boosts look of profits
* Brent inches back after Monday's 1-yr high on Russia
* U.S. stock markets start lower
* Samsung slumps after telling carriers to stop selling
* Sterling drops back under $1.23 as Brexit woes weigh
By Marc Jones
LONDON, Oct 11 The dollar powered to a near
two-month high on Tuesday, leaving other major currencies for
dust but cheering Europe's stock markets as the latest slump in
the pound sent London's FTSE to a record high.
The dollar was on the rise again as growing
expectations of a U.S. rate hike before the end of the year
pushed up Treasury yields - the benchmark for the
world's borrowing costs - to the highest since early June.
Europe's bonds managed to resist the selling though oil
prices could not as they slipped back from their highest level
of the year amid lingering scepticism about OPEC's plans to cut
Wall Street was expected to start in the red too
but with the dollar running things and little data to get stuck
into, the focus stayed on Europe and the record-high FTSE
as the pound's tumble improved the look of its
international firms' profits.
Sterling was back under $1.23 and 90 pence per euro
while the dollar muscled its way to an 11-week
high as the rising rate hike bets came alongside waning support
for Donald Trump in the U.S. election race.
Saxo Bank's head of FX strategy, John Hardy, said the
dollar's push and the pound's woes both looked set in for now.
On the pound he added: "The whole Brexit scenario is providing
the tailwinds here. Real money and real flows have to get out of
their exposures to sterling."
Sterling was not the worst performer for once, however.
South Africa's rand slumped 3 percent and its bonds
tumbled as prosecutors issued Finance Minister Pravin Gordhan
with a formal summons in relation to a tax department
The euro dropped below $1.11 for the first time since
early August despite broadly reassuring German sentiment data
, while the yen sagged to 103.65 per dollar.
One of the other big global market drivers of recent weeks,
oil, eased off a one-year high, meanwhile, to 52.73 a barrel for
Brent and $51.01 for WTI as doubts lingered about
OPEC plans to cut production.
Goldman Sachs said in a note to clients on Tuesday that
despite a production cut becoming a "greater possibility",
markets were unlikely to rebalance in 2017.
The pound's fall was its fourth in a row and sixth in the
past seven days. New Bank of England rate setter Michael
Saunders said he would not be surprised if it kept going, though
he stressed the BoE could overlook the effect of weak sterling
on inflation, possibly for years.
"Given the scale and persistence of the UK's current account
deficit, I would not be surprised if sterling falls further, but
I am fairly agnostic as to whether any further depreciation is
likely," Saunders told UK lawmakers in a written submission.
Another new BoE policymaker - University of Chicago academic
Anil Kashyap - said seperately that sterling could weaken
further if Britain suffers a "hard Brexit", where it loses its
preferential trading terms with the European Union.
Kashyap said Britain would not need to lose many financial
services jobs to knock a hole in its government finances,
something that could further damage the pound's value.
"We still see downside risk (for sterling), particularly
against the dollar, but we are aware that this won't be a
straight line," said Thushka Maharaj on JP Morgan Asset
Management's global multi-asset solutions team.
In Asia overnight, MSCI's broadest index of Asia-Pacific
shares outside Japan ended down 1.1 percent, a
clear contrast to Japan as the Nikkei closed at its
highest in more than a month, thanks to a weaker yen.
Most of Asia's damage was done by South Korea and
Samsung as it slumped 7.4 percent after it halted
sales of its Note7 phones and told owners to stop using them
while it investigates reports of fires in the devices.
China's CSI 300 index advanced 0.2 percent and the
Shanghai Composite rallied 0.4 percent, after Beijing unveiled
guidelines to cut some of the massive amounts of corporate debt
at state-owned companies.
The yuan hit another six-year low meanwhile as the dollar
stood tall and market speculation of depreciation grew after the
Chinese central bank set a weaker official guidance rate for the
(Editing by Alison Williams)