Shares Fall, Dollar Spurts
The dollar leapt half a pfennig as concerns about political instability in Moscow pressured the German currency and Swiss franc.
Share markets in both Germany and France also pared gains after the news from Moscow. This is disturbing news for European assets given the potential for increased political instability in Russia, said Keith Edmonds, chief analyst at IBJ International in London.
Russian financial markets had already spent a jumpy day that saw sharp falls in shares and bonds. There was panic in the morning, said a trader at the Troika-Dialog bank in Moscow.
Share traders in France and Germany blamed the Lebed news for a turndown in share prices, but London dealers were focused more on a string of US figures.
British shares originally stayed firm after US jobless claims and housing starts came in largely as expected. But tame US economic data did nothing to quash concerns about US corporate earnings data and London slipped with Wall Street. By 1445 GMT the Dow was trading nearly 11 points up DM6,032 but well off its highs for the day.
Some foreign exchange analysts said they thought the impact of the Lebed sacking on the dollar would be limited. The sentiment for the dollar is really very positive anyway right now, said Gabriele Lamers, an international economist at Bank of Boston.