11:30 PM
Euro extends fall but gold at record pre-G20
Addison Ray
By Daniel Magnowski
SINGAPORE | Tue Nov 9, 2010 12:44am EST
SINGAPORE (Reuters) - The euro extended its losses on Tuesday on renewed concerns about high sovereign debt in the euro zone, providing further reprieve for the dollar and prompting some profit-taking in stocks.
Gold added to a record breaking run, hitting a new high above $1,400 an ounce as investors sought safe havens in the face of a number of uncertainties, including the euro-area debt concerns and this week's G20 leaders' summit.
The euro has dropped 3 percent against the dollar from a 9- month high set last week and against the yen has slipped to a one-week low, although some forecast limited downside.
"We've probably seen a short-term top in the euro," said Grant Turley, strategist at ANZ in Sydney, adding it was a mild corrective move and unlikely to worsen unless concerns over the euro zone's sovereign debt intensify.
Ireland is the latest country to rattle the single currency, with Irish borrowing costs extending a month-long climb on worries about a political impasse in Dublin ahead of a budget vote.
The yield on Irish 10-year bonds hit 8 percent for the first time on Monday.
Adding to the market's cautious tone, top officials at the U.S. Federal Reserve offered differing assessments of the central bank's $600 billion bond-buying programme announced last week.
One argued it was an effective way to offset deflation risks and another warned it might need to be curbed to head-off inflationary pressures.
Another uncertainty for markets is a G20 leaders' meeting this week in South Korea, where currency tensions loom large.
"The market is also going to be wary ahead of G20 but I think they'll struggle to come up with any substantive plan," ANZ's Turley said.
Investors in stock markets, cautious after recent rises, chose to bank gains.
The benchmark Nikkei average .N225 fell 0.7 percent in early trade after the index had risen to a three-month high the previous day.
Shares in Japanese precision machinery makers, which depend on Europe for many of their sales, were among the biggest losers as investors worried a strong yen would crimp earnings.
"The yen's strength against the euro is inducing some selling pressure," said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.
The MSCI index of Asia Pacific shares outside Japan .MIAPJ0000PUS eased.