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GLOBAL MARKETS-US dollar hits 3-year low, gold at record peak

Published 04/21/2011, 09:54 AM
Updated 04/21/2011, 09:56 AM

* Gold posts fresh life-time high, silver at 31-year peak

* U.S. dollar hits 3-year low, charts point to record low

* Strong U.S., European corporate earnings boost equities

(Updates market action, changes dateline, previous London)

NEW YORK, April 21 (Reuters) - The U.S. dollar tumbled to a three-year low on Thursday against major currencies and gold surged to a new high as investors piled into investments that are less reliant on the U.S. economy.

Upbeat U.S. and European corporate earnings propelled world stocks to a 33-month high. Several U.S. bellwether stocks jumped after strong earnings but many of those companies have significant sales around the world.

"Strong earnings reports from a lot of companies have driven risk appetite and we have seen huge moves in all dollar crosses, but it would be surprising if we didn't see some profit-taking," said Richard Falkenhall, currency strategist at SEB in Stockholm.

Investor focus has shifted to solid U.S. and European corporate earnings and signs the global economy is chugging along even as the Federal Reserve remains cautious about when it will start to unwind its super-loose policy, offsetting concerns over sovereign debt problems on both sides of the Atlantic.

This has emboldened investors to pile back into riskier assets, though some analysts advised caution as worries about the euro zone debt crisis and problems in the supply chain following the Japanese earthquake stayed in the background.

With little chance of Fed raising interest rates this year, the dollar index <.DXY> fell 0.47 percent to 74.020 after falling to 73.735, its lowest level since August 2008. Technical charts suggested it could move towards a record low of 70.698 hit earlier that year. [FRX]

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The weak greenback helped push spot gold

The rally in precious metals was also seen in worldwide stock markets.

The MSCI All-Country World Index <.MIWD00000PUS> rose 0.5 percent to a high of 350.34, last seen in July 2008. The index has risen around 6 percent so far this year.

The FTSEurofirst 300 <.FTEU3> index of top European shares was up 0.5 percent, while Wall Street stocks <.DJI> <.SPX> <.IXIC> opened higher. [US/]

Asian stocks rose to their highest level since January 2008 with Japan's Nikkei <.N225> closing up 0.8 percent.

Oil prices in London turned negative after a weaker-than-expected reading on U.S. jobless claims stoked worries over energy demand. ICE Brent June crude had risen above $124 a barrel earlier on the weakness in the dollar and a drop in U.S. stockpiles. [O/R]

(Additional reporting by Richard Leong in New York; Emelia Sithole-Matarise, Jessica Mortimer, Atul Prakash and Vikram Subhedar in London)

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