Euro markets see rebound curtailed; dollar edges up

LONDON: European stock markets fell yesterday, mirroring losses in Tokyo and overnight on Wall Street as concerns resurfaced over high interest rates, dealers said.

London??™s FTSE 100 index of leading shares lost 0.29% to 5,609.60 points in early afternoon trade, Frankfurt??™s DAX 30 index dropped 0.39% to 5,417.94 points and in Paris the CAC 40 declined 0.24% to 4,717.83.

The DJ Euro Stoxx 50 index of leading eurozone shares gave up 0.56% to 3,470.76 points.

European stock markets had closed higher Monday, buoyed by the telecoms sector, but fell Tuesday after Japanese share prices closed sharply lower.

London??™s FTSE was weighed down by losses to heavyweight oil stocks.

Royal Dutch Shell shed 1.07% to 1,753 pence and BP decreased 0.92% to 590 pence.

In Paris, Euronext lost 0.51% to 68.65 euros on talk that the pan-European stock exchange could ditch its plans to tie the knot with the New York Stock Exchange in favour of a merger with Deutsche Boerse.

The German stock market operator meanwhile gained 0.78% to 101.71 euros in Frankfurt.

World stock markets began suffering heavy losses a month ago, and erased all gains won since the start of 2006 before staging a slight recovery last week.

Mike Lenhoff, chief strategist at Brewin Dolphin Securities, said the drop in share prices must been seen as a correction.

???This is something that will be overcome. You have to allow a correction like this to run its course.???

He added: ???I would not share any view that we??™ve got an inflation problem on our hands but I think that it??™s right for the central banks to let everybody know that they are watching inflation and they will respond accordingly if they sense that the inflationary pressures are building.???

Comments from regional Fed presidents Jack Guynn and Richard Fisher highlighted the central bank??™s concerns about keeping inflation in check.

The dollar edged up against the euro but lost ground against the yen after the Bank of Japan (BoJ) effectively gave the green light to a summer interest rate hike, dealers said.

The euro dipped to $1.2567 in late European trading from 1.2578 late Monday in New York.

The dollar rose to ??115.05 from 115.49 on Monday. ??“ Agencies