Dollar hits 100 yen, stocks slip after rally

NEW YORK (REUTERS) - The United States (US) dollar broke through 100 yen on Thursday, its highest level against the currency in over four years, while stocks in major markets slipped from recent record levels.

Investors sold the low-yielding yen as support from central banks around the world continued to push cash into higher-yielding assets. US stocks fell slightly after recent gains from a rally that had taken the S&P 500 index to record highs for five straight sessions.

The dollar got support from US data showing first-time applications for unemployment insurance fell last week to the lowest level in more than five years.

"A stampede out of safety and brightening US job prospects helped catapult the dollar over the key triple-digit threshold against the yen," Mr Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, said in a note.

The yen is on track for eight straight months of declines against the greenback, shedding more than 30 per cent since its September high near 77.

A major stimulus program by the Bank of Japan last month to revive the economy has helped prolong the yen's weakening trend.

US stocks slipped but the recent uptrend remains intact, giving room for declines after the strong climb.

"This market is so stretched to the upside that if we get some little wiggle somewhere, I can easily see us getting back down to 1,580" on the S&P 500, said Mr Stephen Massocca, managing director of Wedbush Equity Management LLC in San Francisco.

Pullbacks in US equities have been short-lived and shallow even as traders have said the market could benefit from a correction.

The expectation of continued accommodative monetary policy from central banks globally has sustained support for stocks.

At the close the Dow Jones industrial average fell 22.5 points or 0.15 per cent, to 15,082.62, the S&P 500 lost 6.02 points or 0.37 per cent, to 1,626.67 and the Nasdaq Composite dropped 4.1 points or 0.12 per cent, to 3,409.17.

The Euro STOXX 50 index dropped 0.4 per cent, retreating from a near two-year high but finding support at an upward trendline from lows hit on April 18. The pan-European FTSEurofirst closed flat to stay near five-year highs.

The MSCI world index, which tracks stocks in 45 countries, was down 0.7 per cent after earlier hitting its highest level since June 2008.

GREENBACK RISES BROADLY

The US dollar rose against major currencies almost 1 per cent and above its 14- and 50-day moving averages.

The yen closed the session down 1.6 per cent at 100.59 per dollar.

The euro was down 0.8 per cent at $1.3045 after earlier hitting a high of $1.3177.

The euro was pressured by slightly softer-than-expected demand at a Spanish debt auction, while Spanish government bond yields rose.

Brent crude edged up in volatile trade and US crude settled slightly down, as investors weighed Middle East tensions against weak demand and high inventories.

US oil fell 23 cents to settle at $96.39 a barrel and was down further in extended trading. Brent crude edged up 13 cents to settle at $104.47 per barrel and later dropped 9 cents to $104.25.

Brent has dipped from a one-month high of $105.94 touched on Tuesday after Israeli air strikes on Syria over the weekend stoked supply fears.

"There's a tug of war here; the demand is not going to be there, but the economy is slowly improving," said Mr Mark Waggoner, president at Excel Futures in Bend, Oregon.

Saudi Arabia increased crude oil output by 160,000 barrels per day to 9.3 million bpd in April, industry sources said this week, adding to an already well-supplied global market.

Spanish bond yields rose on speculation Madrid may be planning another bond sale after borrowing costs fell at Thursday's auction of just over 4.5 billion euros (S$7.3 billion) of new debt.

The country's 10-year bond yields were 8 basis points higher at 4.195 per cent, having moved away from the 2-1/2 year lows of 3.954 per cent touched last Friday.

Prices for US Treasuries were flat as investors balanced stronger-than-expected jobs data with expectations that riskier assets such as equities could see a correction soon.

The US 10-year Treasury note yield inched up to 1.811 per cent, the highest in nearly a month. The US 30-year bond traded down 5/32 to yield 2.994 per cent from 2.987 per cent late on Wednesday.

Gold prices fell after the US jobs data, with dollar strength weakening the price further. Spot gold was down 1 per cent to $1,456.69. The metal gained 1.4 per cent in the previous session, its biggest one-day rise in two weeks.