European shares slide, dollar climbs off three-week low

 

The US dollar climbed off a three-week low and share markets were volatile on Friday, as unexpectedly weak US economic data dampened expectations of a early scale back of Federal Reserve stimulus.

 

The dollar was just off a three-week low against a basket of six key currencies although a surprise fall in German retail sales put pressure on the euro as it dipped 0.2% to $1.3030.

 

European shares dropped 1% as month-end factors added to the data disappointment, but they remained on course for their 12th straight month of gains. In Asia, Japan's Nikkei had bounced 1.7% at the end of its worst week in over a year.

 

"I still think if we look in the medium term, the momentum in equities is still intact," said Peter Garnry, strategist at Saxo Bank. "For this momentum to stop it would require some kind of a political or market hiccup in Europe," he added.

 

In the debt market, German Bund futures edged up with traders looking to additional euro zone and US data later in the day that could shed light on the monetary policy outlook. Euro zone inflation data is due at 0900 GMT, with an expected rise likely to dampen the chances of an ECB rate cut next week.