WSJ:European Stocks Oscillate, Dollar Extends Losses ahead of US Payrolls
By Nina Bains
European stocks oscillated Friday and the dollar extended losses against the yen ahead of a data release on the U.S. labor market, while German bunds rose after the growth forecasts for Europe's largest economy were cut.
Germany's benchmark DAX 30-stock index briefly underperformed other regional bourses after Germany's central bank cut its growth forecast for Europe's largest economy to 0.3% this year from its December estimate of 0.4%. In addition, it also lowered its forecast for 2014 growth to 1.5% from 1.9%.
The downbeat growth outlook overshadowed some otherwise positive readings on the economy.
German industrial production in April increased for the third consecutive month, up 1.8% from March, beating economists' forecasts of an unchanged reading.
Separate data showed German exports of goods also gained momentum in April.
The euro was steady against the dollar but German bunds pushed higher.
The dollar extend losses against the yen on jitters over the health of the U.S. economy and following comments from Japan's finance minister.
Japanese Finance Minister Taro Aso said moves in the yen were being watched closely but added he had no intention of directly intervening in the currency market to stem the currency's recent rebound.
The dollar was at Y95.42 from Y96.99 late Thursday in New York.
The rebound in the yen had a negative impact on Japanese stocks, with the country's benchmark stock index now flirting with bear-market territory. Japan's benchmark Nikkei Stock Average pared loses to close at 12877.53, down 0.2%, after hitting an intraday low of 12548.20.
U.S. stock futures fell, while European stocks oscillated between small gains and losses ahead of the U.S. nonfarm payrolls report later in the session.
The indicator is one of the most closely watched measures on the health of the U.S. economy and investors are hoping the reading will give further clues on the outlook for the Federal Reserve's bond-buying program.
"The Fed has got itself into an almost impossible situation," said Rebecca O'Keeffe, head of investment at Interactive Investor. "With QE1 and QE2 there were clear end dates, but in making QE3 open ended, the market has become overly dependent on stimulus continuing and it is increasingly spooked at the prospect of withdrawal."
