* U.S. stocks flat, European stocks extend losses
* Weak earnings, Deutsche loss, German retail sales weigh
* Euro fall tempered by dollar under pressure
NEW YORK, Jan 31 The euro rallied against the
dollar on Thursday en route to its best monthly performance in
more than a year, while U.S. stocks were flat in muted trading,
with investors reluctant to make large bets ahead of the key
U.S. jobs figures on Friday.
U.S. data continued to paint a mixed picture of the world's
largest economy. A measure of business activity in the U.S.
Midwest rose in January to its strongest since April, but an
earlier report indicated a rise in U.S. jobless claims in the
A drop in German retail sales initially put the euro
under pressure, but the recent bullish trend resumed during U.S.
trading. The single currency was headed for its best month in 15
months against the dollar on Thursday, as signs of recovery in
the euro zone's economy, and in its banks, helped it gain
against the dollar.
The euro hit a peak of $1.3593 on Thursday before pulling
back slightly. The Federal Reserve's promise of continued
support was widely expected to keep downward pressure on the
dollar. The dollar, meanwhile, edged higher against the yen to
"The overall recent trends are intact," said Nick
Bennenbroek, head of currency strategy, at Wells Fargo Bank in
New York. "The euro probably wants to go higher and the yen
probably wants to go lower."
Recent gains in risky assets such as equities, commodities,
and high-yield debt have eased after sharp advances in the last
six months. Growth in emerging economies such as China has
picked up and fears of a collapse of the euro have been calmed
by the European Central Bank.
Data on Wednesday showed U.S. GDP slipped 0.1 percent where
a rise had been expected, although the Federal Reserve indicated
the pullback was likely to be brief and repeated its promise to
continue supporting the economy.
But the main focus is on U.S. payrolls data on Friday for a
take on the health of the world's biggest economy.
"Unfortunately it's still a mixed picture. It appears we are
just getting a lot of conflicting data right now," said Jack
Ablin, chief investment officer at BMO Private Bank in Chicago.
"With 1,500 (in the S&P stock index) right here, my guess is
there is just not enough conviction to push us substantially
The Dow Jones industrial average was up 7.18 points,
or 0.05 percent, at 13,917.60. The Standard & Poor's 500 Index
was down 1.39 points, or 0.09 percent, at 1,500.57. The
Nasdaq Composite Index was up 5.51 points, or 0.18
percent, at 3,147.82.
The pan-European FTSEurofirst 300 was down 0.2
percent, and the MSCI world index was down 0.1
percent. Disappointing results from heavyweights AstraZeneca and
Royal Dutch Shell also took their toll on market sentiment.
Falling German retail sales, stagnant French consumer
spending and a big quarterly loss at Deutsche Bank dashed hopes
of a rebound for European shares, which had their biggest daily
fall of the year on Wednesday. Those stocks are still up 3.7
percent this month. .
Spot gold drifted down to $1,663.80 an ounce after
hitting a one-week high on Wednesday, while oil prices
inched down 18 cents to just under $115 per barrel, still well
above their starting price this year of $110 a barrel.
U.S. light sweet crude oil fell 71 cents, or 0.72
percent, to $97.23 per barrel.
There was no sign of weakness in growth-attuned copper
as it marched to its highest level since October.
BUND FUTURES PARE GAINS
German Bund futures pared gains on Thursday, continuing a
recent shift away from safe haven debt. Bund futures
were last 25 ticks higher on the day at 141.68, having risen as
high as 142.17 earlier in the session.
Prices for U.S. Treasuries were volatile a day after the Fed
said it would continue buying bonds as the economy temporarily
stalled, but uncertainty about growth in the world's biggest
economy kept yields within recent ranges.
The benchmark 10-year U.S. Treasury note was
down 2/32, with the yield at 1.9975 percent.