* World equity markets dip but remain near recent highs
* U.S. investors look to corporate results for direction
* Yen weak as Japan's Abe piles pressure on BOJ to ease
By Ryan Vlastelica
NEW YORK, Jan 14 The euro hit an 11-month high
against the dollar on Monday as fading prospects of an interest
rate cut in Europe bolstered demand, while world share markets
ticked lower following recent gains.
The common currency was up 0.2 percent at $1.3365, having
hit a high of $1.3404 earlier for a hefty 2.5 percent
jump since European Central Bank President Mario Draghi dampened
expectations of further monetary policy easing in the near term.
Europe's FTSE Eurofirst 300 index of top companies
fell 0.4 percent but was still near a two-year high. The MSCI
International ACWI price index of global shares
was 0.2 percent lower but remained near an 18-month high.
U.S. shares were slightly lower as investors awaited an
onslaught of corporate earnings reports. While some early
numbers, notably from Alcoa Inc, have indicated strength,
many investors worry that uncertainty over the recent fiscal
impasse in Washington may have pressured companies in the
"I think there's going to be more misses than hits in terms
of revenue and margins. It's going to be a little bit light this
earnings season compared to the last one," said Peter Cardillo,
chief market economist at Rockwell Global Capital in New York.
The Dow Jones industrial average was down 22.16
points, or 0.16 percent, at 13,466.27. The Standard & Poor's 500
Index was down 5.82 points, or 0.40 percent, at 1,466.23.
The Nasdaq Composite Index was down 20.07 points, or
0.64 percent, at 3,105.56.
The Nasdaq was pressured by Apple Inc, which fell
3.5 percent to $501.71 after a report it had cut orders for LCD
screens and other parts for the iPhone 5 this quarter due to
Equity markets have risen and most major currencies have
gained against the dollar so far this year after U.S. lawmakers
struck a deal on taxes, easing fears of a sudden fiscal
tightening that would slow the economy. Chinese data, which has
begun to show a pick-up in momentum in the world's second-
largest economy, has added to the optimism.
Japan, the third-largest economy, is embarking on a new
strategy to lift itself out of recession, weakening the yen
substantially but boosting Tokyo stocks.
The dollar's value against a basket of major currencies
floated around its lowest levels since the start of the
Chicago Federal Reserve chief Charles Evans, a voting member
of the Fed's policymaking committee this year, underlined the
better outlook by forecasting the U.S. economy would grow 2.5
percent in 2013 and 3.5 percent in 2014.
Evans added that markets could be confident the U.S. central
bank would take action to boost the recovery without letting
inflation take hold, although he did not refer to any further
The benchmark 10-year U.S. Treasury note was up
8/32, the yield at 1.8377 percent.
Fed Chairman Ben Bernanke will speak on the outlook later in
the day and investors will scrutinize his remarks for any clues
on how much longer the Fed's bond purchase program will last.
Any suggestion that the Fed is in no hurry to end its
quantitative easing program would probably lead to the dollar
softening further against higher-yielding currencies such as the
Australian dollar and those of faster-growing emerging
The Japanese yen was flat at 89.17 yen against the dollar.
Previously, the currency touched a 2-1/2-year low on
expectations that a round of aggressive monetary easing is
coming soon in Japan.
Prime Minister Shinzo Abe reiterated on Sunday his calls for
the Bank of Japan to set a 2 percent inflation target and pursue
bolder monetary easing to end nearly two decades of deflation.
Abe, who has already announced a huge budget stimulus for
the Japanese economy, said he would appoint a new head of the
central bank who shares his views when Governor Masaaki
Shirakawa's term ends in April.
"The confirmation that there's going to be a push for a new
governor (and) that new governor is going to have a mandate of 2
percent inflation - that plus the fiscal stimulus is a major
negative for the yen," said Callum Henderson, global head of FX
research for Standard Chartered Bank in Singapore.
Tokyo markets were closed on Monday for a holiday but
MSCI's broadest index of Asia-Pacific shares outside Japan
rose 0.5 percent on the statement, remaining
near a 17-month peak set on Friday.
The growing optimism over the outlook for the world's
biggest economies helped commodity prices recover from last
week's decline. Oil also benefited from a resurfacing of fears
about a disruption of supply from the Middle East.
A cut in Saudi Arabian production last month, pipeline
sabotage in Yemen and a weather-related drop in Iraqi shipments
have reduced output, while fighting in Syria and Iranian naval
exercises in the Strait of Hormuz reminded investors of the risk
of wider disruption to Middle East supply.
Brent crude gained 0.2 percent to $110.83 a barrel
while U.S. crude was down 0.3 percent at $93.33 a barrel.
Copper edged down 0.3 percent to $8,020.75 a tonne
and gold was rose modestly.