Euro drops as Greece fears stoked, Treasuries up
The euro dropped on Thursday on a report that Greece is not hopeful of aid from the European Union, while Asian stocks hovered near a two-month high, supported by solid growth expectations for the region.
Major European stock markets <.FTEU3> were seen slipping as much as 0.3 percent after a steep two-day rally, with lower oil and metal prices weighing on shares of resources firms, according to financial bookmakers.
But U.S. stock futures eased 0.2 percent, indicating a weaker open on Wall Street after stocks finished at 17-month highs overnight.
After the U.S. February Producer Price Index reflected benign wholesale price pressures, investors will be looking to U.S. consumer inflation and jobless claims data later on Thursday for further clues on the health of the world's largest economy and the likely timing of interest rate hikes.
Fears about Greece's ability to raise desperately needed funding were stoked after Dow Jones, citing an unnamed senior Greek official, reported the indebted country may be forced to ask the International Monetary Fund for help as early as April 2-4.
The Greek official said the government was not hopeful of help from EU partners at a summit next week.
The Greek issue continues to hover over euro/dollar like a dark cloud, Boris Schlossberg, director of currency research at GFT in New York, said in a note.
If the EU is unable to find a pan-European solution to resolve the crisis, the currency could weaken further on fears that many of the other southern European economies may be next, as the risk of fragmentation increases exponentially.
The euro was down 0.5 percent at $1.3672 and off 0.6 percent against the yen at 123.30 yen. Since 2010 began, the euro has lost 6 cents in value.
The dollar slid 0.2 percent against the yen to 90.15 yen.
Worries about Greece kept shares in Asia subdued despite the strong gains on Wall Street overnight.
Japan's Nikkei share average <.N225> fell 1 percent, weighed down in part by profit taking in technology-related stocks, which had raced up in recent sessions.
Despite grinding deflation, Japanese companies have become far less gloomy about economic conditions than three months ago, a Reuters poll showed, implying a large improvement in the Bank of Japan's own tankan survey next month.
MSCI's index of Asia Pacific ex-Japan stocks <.MIAPJ0000PUS> dripped 0.2 percent. The index has risen more than 8 percent since February, when easing fears about Greece's fiscal crisis encouraged more investor risk taking, compared with 5.2 percent on the all-country world index <.MIWD00000PUS>.
A sustained global economic recovery and portfolio rebalancing has helped developed stock markets rise 1.1 percent versus a 1.1 percent fall in emerging markets so far this year. But a Reuters poll showed developing markets, especially Russia and China, will outperform advanced markets by year end.
Asian markets have rebounded in recent weeks, drawn by the region's solid growth prospects.
The near-term outlook for Asian equities is good because global growth is accelerating and we still have two quarters of good year-on-year growth in front of us, said Dariusz Kowalczyk, chief investment strategist with SJS Markets in Hong Kong.
U.S. 10-year Treasury note futures were up slightly following the report on Greece. In the cash market, the 10-year yield was at 3.62 percent compared with 3.64 percent late on Wednesday in New York.
The 10-year Japanese government bond future fell to a 4-month low after the upbeat Reuters poll pointed to a gradual recovery.
U.S. oil futures slid 0.7 percent to $82.32 a barrel as the dollar firmed, but stayed in sight of the 2010 high of $83.95.
(Editing by Kim Coghill)
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