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Dollar eases, stocks climb amid benign U.S.inflation

Reuters  |  NEW YORK 

By Herbert Lash

(Reuters) - The U.S. dollar eased on Friday while an index of world stock markets gained and was poised for its best week since early March, as moderate eased worries about a faster pace of U.S. interest rate hikes and boosted risk appetite.

The dollar fell for a third day against a basket of major currencies as traders booked recent gains, which were tied to widening interest rate gaps in favour of the and signs of slower growth elsewhere in the world.

Gold was set for its first weekly gain in four weeks after soft U.S. data on Thursday suggested the Federal Reserve would show caution as it boosts interest rates.

prices slipped but remained near 3-1/2 year highs as the prospect of new U.S. sanctions against tightened the outlook for supply at a time when global crude production is just keeping pace with rising demand.

U.S. stocks gained as stocks led a rally even after blasted drugmakers and "middlemen" for making prescription drugs unaffordable for Americans. Trump also said the makes an "absolute fortune" at the expense of taxpayers.

The S&P index <.SPXHC> rose 1.18 percent as it became clear the had avoided taking aggressive and direct measures to cut drug prices.

The market is responding to exceptionally strong earnings growth and benign inflation, said Leo Grohowski, at in

The <.VIX>, a barometer of expected near-term volatility for the that often is referred to as Wall Street's fear gauge, has fallen to levels last seen before the February market correction, Grohowski said.

"Not only has the market returned handsomely, but risk has also taken a breather," he said.

MSCI's gauge of stock markets across the globe <.MIWD00000PUS> gained 0.34 percent.

European shares edged higher, with the pan-regional <.STOXX> index of companies in 17 countries, closed up 0.11 percent for a seventh straight week of gains and the largest string of weekly advances since March 2015.

Shares in and General Trust (DMGT) rose 1.3 percent, having jumped as much as 9.4 percent, after U.S. private equity firm agreed to buy ZPG , the owner of British property websites Zoopla and PrimeLocation, for $3 billion.

On Wall Street, the Dow Jones Industrial Average <.DJI> rose 37.06 points, or 0.15 percent, to 24,776.59. The <.SPX> lost 0.29 points, or 0.01 percent, to 2,722.78 and the <.IXIC> dropped 20.31 points, or 0.27 percent, to 7,384.67.

U.S. plans to reintroduce sanctions against Iran, which pumps about 4 percent of the world's oil, has buoyed crude prices.

U.S. crude fell 66 cents to settle at $70.70 per barrel and Brent settled down 45 cents at $77.12.

The dollar index <.DXY> fell 0.12 percent, with the euro up 0.24 percent to $1.1941. The Japanese yen firmed 0.1 percent versus the greenback at 109.27 per dollar.

Central bankers around the world appear to have become more cautious as concerns over and international trade cloud the global

On Thursday, the of England held rates against recent expectations and New Zealand's Reserve said the official cash rate will remain at 1.75 percent for "some time to come."

This leaves the Fed as the only major central committed to rate hikes, but Thursday's moderate inflation reading cast doubt over the pace of these hikes.

Benchmark 10-year notes rose 1/32 in price to yield 2.9677 percent.

U.S. gold futures for June delivery settled down $1.60 at $1,320.70 per ounce.

(Reporting by Herbert Lash; Editing by and Chizu Nomiyama)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Sat, May 12 2018. 00:55 IST