Falling Equities Lift Dollar And Yen,"

Falling Equities Lift Dollar And Yen,"By Nicholas Hastings
LONDON (Dow Jones)--A 2.6% fall in the Shanghai Composite Index set the tone in currency markets in Europe Tuesday, with the dollar and the yen benefiting as safe havens.
The euro, with other high-yielders, were the main losers as the market waits to see if U.S. consumer confidence data later in the day lives up to expectations.

The downturn in market sentiment started late in New York Monday with the Dow Jones Industrial Average ending a marginally 0.03% higher.
Analysts said the overall mood of global markets has been depressed by remarks from Chinese Premier Wen Jiabao that monetary policy will stay loose because the economy faces new difficulties.
This appeared to inject fresh jitters into financial markets when concern about the global recovery was already on the rise.
In Japan, the Nikkei lost 0.8% on the day while in China the Shanghai Composite fell as much as 5.5% at one stage before rebounding just before the close to end down just 2.6%.
Although news that Israel had been one of the first economies to start hiking interest rates didn't have a direct impact on market sentiment, it contributed to the impression that the era of low recession-driven global rates is coming to an end. Norway is expected to be the first G10 country to follow Israel.
A report that Japanese three-month Libor rates have fallen under those in the U.S. for the first time in 16 years also helped focus market attention on relative yields and push the yen higher against the dollar.
Some analysts suggested that the downbeat mood could be extended if new consumer confidence data in the U.S. fails to live up to expectations. The data from the Conference Board is forecast to show the confidence index rising to 48 from 46.6.
However, James Knightley, a senior economist with ING Financial Markets, said a sharp fall in the University of Michigan's confidence survey and a disappointing retail sales report for July will make the market wary of weakness.
"If so, this may add to concerns regarding the sustainability of the recovery story," he said.
By 0915 GMT, the dollar had fallen to Y94.33 from Y94.52 late Monday in New York, according to EBS.
The euro was down at $1.4280 from $1.4299 and at Y134.73 from Y135.15.
The dollar was also up at CHF1.0624 from CHF1.0616 while the pound was down at $1.6365 from $1.6412.