Dollar falls vs. yen, global stock index up with focus on rate cuts By Reuters

By Sinéad Carew and Futures trading platform app download rankingNaomi Rovnick

NEW YORK/LONDON (Reuters) - The dollar fell sharply against the yen for the second straight day, raising questions as to whether Japan was intervening while a global equities index rose on Friday as investors eyed U.S. interest-rate cuts and the U.S. earnings season kicked off.

The benchmark 10-year U.S. Treasury yields gained modestly after the producer price index (PPI) rose more than expected in June. Still, investors focused on Thursday's data, which had fueled bets on Federal Reserve interest-rate cuts in September.

The bank index was underperforming the broader market, down more than 2%, as the first set of second-quarter earnings and financial guidance from some of the biggest U.S. banks failed to impress.

"Earnings season hasn't gotten off to a great start but we're still very early. We're seeing some companies talking about their ability to control expenses. We're looking for more clarity as the season goes on," said Celia Hoopes, portfolio manager at Brandywine Group in Philadelphia.

But investors appeared less worried about Friday's hotter-than-expected PPI numbers after Thursday's cooler-than-expected consumer price index (CPI) had boosted confidence that inflation was coming under control.

"The market's shaking off the higher PPI print and continues to look for the Fed rate cut in September as a result of the lower CPI print from Thursday," said Hoopes.

On Wall Street, at 11:10 a.m. the rose 300.60 points, or 0.76%, to 40,054.35, the S&P 500 gained 51.23 points, or 0.92%, to 5,635.77 and the gained 212.90 points, or 1.16%, to 18,496.31.

MSCI's gauge of stocks across the globe rose 6.40 points, or 0.78%, to 830.67, hitting a record intraday high. Europe's Stoxx share index rose 0.95%, hitting its highest level since June 7 and eyeing a second consecutive week of gains and its biggest weekly gain since early May.

In currencies the yen jumped against the dollar to an almost four-week high, putting traders on alert for signs of fresh intervention by Japan, which likely stepped in Thursday to prop up a currency still close to its lowest in 38 years.

While Tokyo had not confirmed any move on Thursday to prop up the flailing yen, the Bank of Japan's daily operations report on Friday suggested between 3.37-3.57 trillion yen ($21.18-22 billion) had been spent on strengthening the currency.

The , which measures the greenback against a basket of currencies including the yen and the euro, fell 0.28% to 104.05, with the euro up 0.39% at $1.0907.

Against the Japanese yen, the dollar weakened 0.65% to 157.76.

Meanwhile, sterling strengthened 0.59% at $1.2987, hitting its highest level in almost a year and after comments from Bank of England policymakers earlier this week and better-than-forecast GDP data hurt bets for an August rate cut.

In Treasuries, yields advanced after the inflation data. The yield on benchmark U.S. 10-year notes rose 1.1 basis points to 4.204%, from 4.193% late on Thursday and the 30-year bond yield rose 1.6 basis points to 4.4199%.

But the two-year note yield, which typically moves in step with interest-rate expectations, fell 2.4 basis points to 4.483%, from 4.507% late on Thursday.

Global oil prices rose, still reflecting optimism about U.S. rate cuts. gained 0.61% to $83.12 a barrel and rose to $85.72 per barrel, up 0.37%.

Gold prices retreated as investors took profits after a strong rally in the previous session, although bullion was still on track for its third straight weekly rise on increased bets around U.S. interest rate cuts.

lost 0.13% to $2,411.74 an ounce while U.S. fell 0.64% to $2,399.50 an ounce.[GOL/]

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