* Main European markets dip in early trade
* Drops in iPhone, U.S. auto sales weigh ahead of jobs data
* Fed statement eyed for signal of June rate hike
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, May 3 European stock markets retreated
from 20-month highs and the dollar inched up on Wednesday as
investors pondered the chances of another rise in U.S. interest
rates next month ahead of the Federal Reserve's May statement.
Since December, the U.S. central bank has finally begun to
deliver on long-disappointed expectations of a steady rise in
borrowing costs and an increase in official rates June is now
almost 60 percent priced in by markets.
But U.S. economic numbers in the past month have been less
convincing, and the latest gains for global share prices look as
much the product of an improving recovery in Europe as the
U.S.-based optimism that dominated the end of last year.
A surprise fall in iPhone sales in the first quarter and
drops in vehicle sales for Ford and General Motors
added to nerves about the durability of U.S. growth in the
absence of a boost from tax cuts or new public spending.
Falls in the price of copper, iron ore and other metals also
underlined growing nerves over China and, with oil prices stuck
near recent lows, weighed on Europe's commodity-heavy indices.
"These numbers point to U.S. consumers becoming more
cautious and do seem like a source of some of the weakness
today," said Andy Sullivan, a portfolio manager with GL Asset
Management UK in London. "Autos, tech and basic resources are
leading Europe lower."
By 0845 GMT, the STOXX 600 index of leading
European shares was down 0.2 percent. France's CAC 40
and Germany's DAX .GDAXI fell 0.3 and 0.2 percent respectively
while the resource-heavy FTSE 100 dipped 0.3 percent.
After a mixed Asian session, with a number of major markets
closed, the MSCI global share index was marginally lower on the
A surge in business investment and the fastest wage growth
in a decade suggest U.S. activity will regain momentum as the
But Satoshi Okagawa, senior global markets analyst for
Sumitomo Mitsui Banking Corporation in Singapore, said the weak
U.S. auto sales could make market participants wary of actively
buying the dollar against the yen for now.
"Concerns about geopolitical risks such as North Korea had
weighed on the dollar against the yen recently ... But the focus
is shifting to whether the (strength) of U.S. economic
fundamentals is for real," he said.
"There is more data coming up including the jobs data, so
those need to be watched closely," Okagawa said, referring to
the U.S. nonfarm payrolls report due on Friday.
The dollar index, which tracks the greenback against
a basket of trade-weighted peers, rose 0.1 percent to 99.055.
It gained around 0.2 percent against the yen and
0.1 percent against the euro on the day but remained below highs
hit over the past week.
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 Nichola Saminather in Singapore,
editing by Larry King)