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. Last Updated: 07/27/2016

Dollar's Crawling Climb Boosts European Stocks




LONDON -- European stocks rebounded late Monday to close mixed, gathering support from a stable dollar and a Wall Street recovery.


The dollar recouped earlier losses made versus the Deutsche mark on a report that a senior U.S. Treasury official said the dollar would weaken to 1.65 to 1.70 marks on diverging interest rate trends in the United States and Germany, which would help U.S. exporters.


Dealers in New York said talk of central bank buying lifted the dollar from its European lows versus the mark, but traders here attributed the rebound simply to some investors' buying back the dollar to cover earlier sales.


Against the yen, the dollar held steady as persistent worries over Japan's weak economy weighed on the Japanese currency.


Ten-year Japanese government bond, or JGB, yields fell to a record low of 1.875 percent overnight, with the market continuing to price in expectations that Japan's interest rates will need to stay low to boost the economy. The record low yield comes before the Bank of Japan releases its quarterly Tankan survey of corporate business sentiment Wednesday.


"You've got record-low JGB yields and prospects of a weak Tankan ... so there's no great rush to buy yen now," said Pat Magill, head of corporate trading at Daiwa Europe in London.


A survey of economists showed Japan's business sentiment worsening as the impact from a tax rise earlier this year lingers.


But yen weakness was expected to remain limited due to dollar sales by Japanese exporters and nervousness over tense U.S.-Japan trade relations. Previously when U.S.-Japan trade tensions erupted, the yen hit a record high against the dollar on perceptions that the United States was using a higher yen to force Japan to open its markets.


The dollar's slow climb, coupled with the Dow Jones Industrial Average's rebound into positive ground, helped boost French stocks.


The Dow was up 17.92 points at 7940.10 in late European trading, having been down about 20 points earlier. The technology-laden Nasdaq composite was up 6.27 at 1,688.51, just off its record peak of 1,688.97 set earlier in the day.


Elsewhere in Asia, stock markets closed mostly lower Monday, but share prices rose in Hong Kong for the fourth consecutive session.


The Hang Seng Index, the Hong Kong market's key indicator of blue chips, rose 153.50 points, or 1.0 percent, closing at 14,864.37.


On Friday, the index had gained 74.28 points. Brokers said share prices rose in reaction to Friday's gain on Wall Street, and that the Hong Kong market's main index was also boosted by sharp gains in the banking sector.


Philippine shares fell as investors continued to worry about the stability of Asian currencies, with the peso falling sharply against the U.S. dollar.


The Philippine Stock Exchange Index of 30 selected issues fell 21.63 points, or 1 percent, to 2,059.15, following Friday's 15.22-point gain.