European shares in the red as investors show interest in bonds, oil

Bond markets look beyond easy ECB money to 1st interest rate rise since '11

The dollar was also pressured by data on Thursday that showed USA producer prices fell for the first time in almost 1-1/2 years in December, which could temper expectations that inflation will accelerate in 2018.

Five-year bond yields in Germany, the eurozone's biggest economy, rose 10 basis points in December, the biggest monthly jump in six.

Yet, "with that in mind, the near term trend for EUR/USD is higher and not lower as all of this is speculation until we actually hear from the Draghi", says Lien.

Later, the market will be keeping a close eye on the USA consumer price index (CPI) and retail sales releases, which may have some bearing on the dollar.

The pairing opened daily trading in the region of 1.1930 and closed higher around 1.1956 in the evening.

The ECB has pledged to continue its bond purchase programme at least until September, and investors expect any rate hike to take place only next year.

But according to Thursday's report, the European Central Bank officials at their last meeting felt that as the economy strengthens, the language about stimulus withdrawal "could be revisited early in the coming year" - that is, early in 2018.

GBP/USD - still finding support at the 1.3500 area so far this year but needs to push beyond the highs of last year at 1.3660.

The rally came after official data showed retail sales climbed 1.2 percent in November, three times the market forecast and the biggest gain since early 2013.Sales were in large part boosted by demand for new iPhones and Black Friday special offers, so there was a risk of a pullback in December.

Germany's DAX 30 index fell 0.7% to 13,287.31, after dropping as much as 1%.

European shares dipped on Thursday as a bond market sell-off and a stronger euro took the steam out of the breakneck New Year rally in equities.

He said: "A little bit of risk-off in the Nikkei and DAX appears to be weighing on early premarket indications of a lower U.S. open for the S&P 500 and the Dow".

What are markets doing: The Stoxx Europe 600 index was down 0.5% at 398.25, with only the financial sector rising, fronted by bank stocks.

While some have speculated that yesterday's move was only a technical change the move sent a ripple through the bond markets, pushing yields up on United States treasuries and other bond markets as traders and investors re-adjusted their positions amidst a worry that they might be underestimating the pace at which central banks might look to withdraw stimulus in the coming months.

Energy stocks led the surge after the price of oil touched its highest level since 2014.

The 10-year Treasury yield stood at 2.5425 percent, settling down further from Wednesday's 10-month high of 2.597 percent when fears of a bond bear market gripped investors.

Among other precious metals, spot silver was up 0.2pc at $16.97 an ounce from a two week low of $16.86 on Wednesday.

Gold contracts for February in the USA increased by 0.2 percent to stand at $1,322.50 an ounce. The failure to overcome the highs of previous year at 1.2095, could be a catalyst for further declines towards 1.1600.

Brent crude futures settled 6 cents higher at $69.26 a barrel, after hitting $70.05 a barrel during the session, its highest level since November 2014.

Expansive monetary policy by central banks in major economies is also credited for the recent buoyance in share prices that has sent major indexes to new highs.

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