Euro dips against dollar, stocks trade mixed
The European single currency slid against the dollar on Wednesday, as the greenback was lifted by the prospect of an extension to US tax cuts, amid stubborn worries over the eurozone debt crisis. Skip related content
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Price by 
| Company name | Last price | Percentage change |
|---|---|---|
| COMMERZBANK | 5.88 | +0.14 |
| CAC 40 | 3858.05 | +26.07 |
The euro weakened to 1.3218 dollars in early trading here, from 1.3258 dollars late on Tuesday in New York.
London's FTSE 100 stock index eased 0.15 percent and the German DAX 30 slipped 0.27 percent, while in Paris the CAC 40 climbed 0.16 percent.The Stoxx 50 index of leading eurozone companies gained 0.11 percent in value.
"The temporary recovery of euro/dollar seems to have come to an end already," said Commerzbank analyst Ulrich Leuchtmann.
"For once it was not an increase in the spreads of the peripheral countries that put pressure on the euro, although the question remains how much of the stabilisation here is attributable to ECB purchases (of government bonds).
"This time the news came out of the United States, where the Obama administration agreed with the opposition Republicans to extend the tax cuts from the Bush era, which would otherwise have run out at the end of this year."
The prospect of extended tax cuts is positive for the greenback because this would aid recovery in the world's biggest economy.
European rallied sharply Tuesday, also helped by a compromise on tax and employment policies between US President Barack Obama and his Republican opponents.
Dealers also digested Tuesday's annual Irish budget, in which the debt-ridden government delivered a widely-expected 6.0 billion euros (8.0 billion dollars) of savings via tax hikes and spending cuts.
"Whilst Europe is imposing harsh austerity programmes, further measures were passed in Washington yesterday that will likely stimulate economic activity," added Leuchtmann.
However, Wall Street closed mostly flat on Tuesday, after trading with strong gains throughout the day, as early enthusiasm over the controversial deal to extend tax cuts was replaced by caution.
In earlier deals on Wednesday, Asian stocks mostly fell amid expectations of a Chinese interest rate hike, but a weaker yen helped keep Japanese shares buoyant.
Tokyo finished trade with a gain of 0.90 percent at 10,232.33 points, which was the highest closing level since June.
But Sydney fell 0.57 percent, led by the banking sector after Treasurer Wayne Swan said he would announce reforms to increase competition in the sector.
Hong Kong's Hang Seng Index dived 1.43 percent and Shanghai fell 0.95 percent.
Investors in China remain cautious ahead of an annual Central Economic Work Conference expected this month and as traders anticipate an imminent interest rate hike to dampen inflation.
Rate hike expectations have grown ahead of key economic data for November, which the mainland authorities said would be released on Saturday instead of the following Monday as scheduled earlier.
Anticipation of a rate hike has grown since October's consumer price index showed a 4.4 percent year-on-year rise in prices, above Beijing's three percent comfort zone
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