Dollar rally cools as miners lead Europe stock fall

London - The dollar fell against the euro, pausing in a rally that breached decade highs this week.

Shares and commodities edged lower as the wait for a flurry of US economic data exacerbated an end-of-year trading slowdown.

The US currency weakened against most of its Group-of-10 peers as traders avoided fresh risks in the run-up to next week’s holidays.

Miners led a decline in European stocks, as data on Chinese zinc output stoked supply concerns, and oil traded below $53 a barrel.

Banca Monte dei Paschi di Siena fluctuated as people with knowledge of the matter said Italy will probably be forced to nationalize the troubled lender.

Thursday’s economic indicators out of the US, including data on durable goods orders and jobless claims, may signal whether business activity mirrors market optimism about Donald Trump’s fiscal stimulus plans.

Speculation the President-elect will open the spigot of spending has sent the dollar to near a 14-year high against the euro and pushed the Dow Jones Industrial Average to almost 20 000 this week.

"If we are expecting signs that the Trump administration is leading to confidence among businesses, the direction of capital spending will be looked at with some interest," said Andrew Milligan, head of global strategy at Standard Life Investments in Edinburgh.

"Going into next year, we are confident the dollar will continue to make headway. It will be the currency that appreciates in 2017; it’s just a question of how much."

Stocks

The Stoxx Europe 600 Index lost 0.1% by 7:19 in New York, retreating from the year’s highest intraday level on Wednesday. The basic resource industry was the biggest decliner, down 1.3%.

Monte Paschi was 0.3% lower, after swinging between a loss of 10% and a gain of 4%.

The Italian lender said no anchor investor has shown interest in a sale of shares. Actelion rose 4.2% after entering exclusive talks about a possible transaction with US drug giant Johnson & Johnson.

Bonds

Treasuries fell, pushing the 10-year yield two basis points higher to 2.56%. German bunds also declined, with the benchmark yield three basis points higher at 0.27%.
 
Commodities

West Texas Intermediate crude oil fell 0.4% to $52.28 a barrel on Thursday after dropping on Wednesday by 1.5%, its first slide this week.

Lead, zinc and nickel dropped at least 2% as data showed China stepping up production.

Gold traded near the lowest level in more than 10 months as investors weighed the outlook for the dollar and US interest rates.

Bullion for immediate delivery dropped 0.1% to $1 130.03 an ounce.