Euro slumps on ECB's Draghi; global shares lower
By Wanfeng Zhou | February 8, 2013 3:47 AM EST
(Reuters) - The euro fell broadly on Thursday after the European Central Bank's chief said policymakers will monitor the impact of a rising currency, while U.S. stocks slid after jobless claims and mixed retail sales data.
The ECB left its main interest rate at 0.75 percent. In a post-meeting press conference, ECB President Mario Draghi said the exchange rate was not a policy target, but is important for growth and price stability.
He also said risks to the economy were on the downside and that economic weakness in the euro zone will likely prevail in the coming months.
"Clearly he does not want to see the euro go much higher," said Boris Schlossberg, managing director at BK Asset Management in New York. "There is massive pressure from the French. He is signaling displeasure that it ran up so much."
The euro was last at $1.3421, down 0.7 percent on the day, with the session low at $1.3419. Against the yen, the euro was down 0.8 percent at 125.58 yen, with the session low at 125.53 yen.
Before Thursday's declines the euro had risen more than 2 percent against the greenback so far this year and over 10 percent versus the yen.
U.S. stocks, after a flat start, fell, with shares of retailers and home builders leading the decline. The Dow Jones industrial average .DJI dropped 104.18 points, or 0.74 percent, at 13,882.34. The Standard & Poor's 500 Index .SPX was down 10.25 points, or 0.68 percent, at 1,501.87. The Nasdaq Composite Index .IXIC was down 23.58 points, or 0.74 percent, at 3,144.90.
"With the S&P 500 Index approaching five-year highs, my sense is that the next leg of any rally will have to come with meaningful revenue growth from a broad swath of the component companies," said Dan Nathan, co-founder of options analytics firm RiskReversal.com in New York.
The benchmark 10-year U.S. Treasury note was up 6/32, the yield at 1.9407 percent.
Weekly initial jobless claims dipped by 5,000 to 366,000, with the four-week moving average falling to its lowest level since March 2008, signaling the economy continues to recover slowly.
Several U.S. retailers reported mixed January sales results, as consumers faced a hit to their take-home pay from higher payroll taxes.
The pan-European FTSEurofirst slipped 0.1 percent to 1,150.79 .FTEU3, while MSCI's all-country world equity index .MIWD00000PUS was down 0.6 percent at 353.24.
"The medium and long-term positive trend is still intact, although on the short term, we're turning 'neutral'; indexes are very close to key support levels," said Aurel BGC chartist Gerard Sagnier.
Brent crude rose 37 cents to $117.10 a barrel. U.S. crude fell 40 cents to 96.22 a barrel.
(Additional reporting by Nick Olivari in New York and Richard Hubbard in London; Editing by Dan Grebler)
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