Dollar Climbs While S&P 500 Drops for Third Day on Tapering Bets

New York (Dec 13)   The dollar gained against most major peers on Thursday -- as U.S. stocks fell for a third day as growth in retail sales added to speculation the Federal Reserve will reduce stimulus. European shares slid to a two-month low and euro-area bonds fell while 10-year Treasury yields were little changed.

The Bloomberg U.S. Dollar Index, a gauge of the currency against 10 counterparts, climbed 0.3 percent at 9:50 a.m. in New York. The Standard & Poor’s 500 Index lost 0.2 percent after sliding 1.1 percent yesterday for its biggest drop in a month. The Stoxx Europe 600 Index declined 0.7 percent, touching the lowest level since Oct. 10, and the MSCI Asia Pacific Index tumbled 0.9 percent. Spanish note yields climbed from near an eight-year low. Gold for immediate delivery lost more than 2 percent.

More economists are predicting the Fed will taper its stimulus as soon as next week and data today showed U.S. retail sales increased more than economists estimated in November. Chinese policy makers meet this week to set growth targets while central banks in Indonesia, New Zealand, South Korea and Switzerland maintained their benchmark interest rates today. European Central Bank policy maker Peter Praet said assessing sovereign-bond risks in a stress test may discourage banks from using ECB funds to load up on government debt.

“According to various sources, tapering is expected between January and March, so earlier could have some negative impact,” Christoph Riniker, head of strategy research at Julius Baer Group Ltd. in Zurich, said in an interview. “Our view is that there is no year-end rally as the performance in the year was very good and investors are too optimistic at the moment.”

The dollar strengthened versus 15 of 16 major peers tracked by Bloomberg, climbing more than 1 percent against the Australian dollar and at least 0.5 percent versus the currencies of Sweden, Japan and Norway.