The pound continued its slide against the dollar on Monday following last week's disappointing U.K. economic data, while the euro nudged lower against the dollar and European stocks hovered within a tight range.
Sterling fell to a fresh five-month low of $1.5712, while the euro rose to a near 14-month high of �0.8552. It wasn't just last Friday's gross domestic product figures, which showed a bigger drop than expected in the fourth quarter, that weighed on the currency.
"Future Bank of England Governor Carney's comments in Davos over the weekend were the latest excuse to add to GBP shorts," said RBC Capital Markets.
Speaking at the World Economic Forum in Switzerland, Mark Carney signaled that he will place emphasis on growth in his new job and is willing to see higher inflation for a longer period of time in order to support the economy, the Daily Telegraph reported on Monday on its website.
Meanwhile, Europe's regional equity indexes failed to find any support from a positive finish on Wall Street on Friday, when the S&P 500 closed above 1500 for the first time since 2007.
"The rally which has propelled equities higher in recent weeks shows some signs of abating this morning as we are seeing retail investors starting to rein in their appetite for risk," said Mike McCudden, head of derivatives at stockbroker Interactive Investor. "Furthermore, with corporate earnings thin on the ground today, investors are struggling to find the drivers in the short term which will push equities on to new highs and may well take this opportunity to bank some profits."
Corporate news was in short supply on Monday. Shares in Ireland-based airline Ryanair slipped, despite the company raising its full-year guidance and posting a better-than-expected third-quarter net profit. Market participants pointed out that the shares had a good run into the results, and were trading at highs not seen since 2007.
Among London's mid caps, general retailers were under the cosh after Morgan Stanley downgraded the sector to "cautious" from "in line," noting that consensus earnings forecasts are around 10% too high.
At around midday, U.S. futures pointed to a largely flat open on Wall Street, where durable goods orders and pending home sales are at 0830 ET and 1000 ET, respectively. Earnings from Yahoo and Caterpillar will also be in focus.
Write to Michele Maatouk at michele.maatouk@dowjones.com
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