Sterling dropped to a two-month versus the greenback amidst carry-trade liquidation on widening credit losses correlated to U.S. mortgage loans. The British currency slid for the day after yesterday?s dovish Bank of England minutes spurred a further sell-off in high yielding pound.
[B][I]European Stocks Retreat; Deutsche Bank, BNP Paribas, BHP Fall[/I][/B]
European stocks dropped the most in 4 1/2 years on concern a global credit crunch will sap earnings and erode economic growth. Deutsche Bank AG, Germany’s largest bank, and BNP Paribas SA of France paced declines. BHP Billiton Ltd. and Rio Tinto Group led mining shares lower as metals prices fell.
[B][I]Sterling hits 5-mth low vs yen as carry unwind deepens[/I][/B]
Sterling lost more than 2 percent against a surging yen on Thursday as investors, spooked by spreading worry about the state of global credit markets, ran for safety to the low-yielding Japanese currency. The yen shot up, sweeping the dollar to a one year low while pummeling sterling and other higher-yield currencies – particularly the New Zealand and Australian dollars – due to fear that credit market problems would spread into other asset classes.
[B][I]Price cuts drive up UK retail sales[/I][/B]
Sharp price cuts in electrical and furniture stores tempted shoppers back to the high street in July, helping retail sales grow at their fastest pace in five months, data released on Thursday showed. The pound received an initial boost from the news as traders noted the numbers were much stronger than forecast. The Office for National Statistics said that the volume of retail sales rose by 0.7 per cent between June and July, giving an annual increase of 4.4 per cent.