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GLOBAL MARKETS-Dollar tumbles, bonds win as Trump trade fizzles

Published 12/01/2017, 09:10 pm
Updated 12/01/2017, 09:20 pm
© Reuters.  GLOBAL MARKETS-Dollar tumbles, bonds win as Trump trade fizzles
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* Graphic: World FX rates in 2016 http://tmsnrt.rs/2egbfVh

* Dollar slip, bonds rally after Trump fails to talk stimulus

* Healthcare stocks in Europe drop 2 percent after Trump talk

* Oil consolidates after bounce, gold hits 7 week high

By Marc Jones

LONDON, Jan 12 (Reuters) - The U.S. dollar nursed widespread losses on Thursday after President-elect Donald Trump's long-awaited news briefing provided little clarity on future fiscal policies, disappointing bulls who had bet on major stimulus.

Trump did not mention possible tariffs against Chinese exports, however - a relief for Asian share markets that have feared the outbreak of a global trade war.

The lack of detail about a potential stimulus also put safety plays such as bonds and gold back in favour, cooling bets that have built in recent months on significantly higher global inflation and series of U.S. interest rate hikes.

It was enough to send the dollar tumbling back below 114 yen JPY= for the first time in five weeks and brought some welcome relief to Brexit-bruised sterling GBP= and Turkey's lira TRY= , which has been badly beaten up this year. EMRG/

"The risk was always that a president like Trump would end up upsetting that consensus (of faster U.S. growth, stronger dollar) view by introducing more political uncertainty," said asset manager GAM's head of multi-asset portfolios Larry Hatheway.

European shares .FTEU3 also fell, bucking gains in Asia and Wall Street overnight and weighed down by a 2 percent slump in healthcare stocks .SXDP after Trump said pharmaceutical firms had been "getting away with murder" with their prices. .EU weren't being helped either by a deck of stronger currencies.

The euro was back at $1.0650 for the first time in a month, shaky sterling GBP= climbed above $1.22 and Sweden's crown EURSEK=D4 hit a four-month high and cracked its 200-day moving average against the euro after pacy inflation data. was also bliss for bond markets that have been in reverse since Trump's election fuel led bets on higher U.S. interest rates that tend to set the bar for global borrowing costs.

Euro zone bond yields fell 2 to 6 bps as German Bunds rallied and as U.S. 10-year Treasury yields fell to their lowest level in more than a month at around 2.30 percent US10YT=RR .

"Overall, investors are wary ahead of Trump's inauguration - a case of buy the talk (Trumpflation), but sell the news," analysts at Societe Generale (PA:SOGN) said in a note.

GOOD AS GOLD

Wall Street had overcome its brief wobble to end Wednesday firmer, though the Dow Jones .DJI still didn't manage to break the 20,000 points barrier and looked set to start around 0.2 percent lower later, according to futures prices. 1YMc1

Tuesday's first Trump news conference since the Nov. 8 election contained no details on tax cuts or infrastructure spending, anticipation of which had fuelled the five-week rally in stocks and a selloff in global bond markets. news conference was a far cry from the market friendly, pro-growth "presidential" comments that Trump delivered at his acceptance speech," wrote analysts at Westpac, adding it left a "veritable laundry list" of questions unanswered.

In commodity markets, oil was a shade firmer in Europe after a minor dip in Asian trading. O/R U.S. crude CLc1 was trading at $52.33 and Brent crude LCOc1 was up 30 cents at $55.40 a barrel follow gains of nearly 3 percent on Wednesday.

The weaker dollar also helped metals markets. Gold rose to a seven-week high just shy of $1,200 per ounce XAU= while London copper CMCU3 traded up almost 2 percent after electronic trading there was delayed by a mystery five-hour outage. MET/

For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Editing by Catherine Evans)

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