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European Stocks Retreat as Dollar Rally Fades Before Yellen 

August 25, 2016

James Regan and Stephen Kirkland, Bloomberg

European stocks fell for the first time this week amid concern over the outlook for economic growth while a dollar rally ran out of steam before signals on the likely path of U.S. interest rates.

Equity markets retreated in Europe as an unexpected drop in German business sentiment signaled companies remained cautious after Britain’s decision to quit the European Union. Iron ore fell on the prospect of shrinking steel production in China and crude oil traded near a one-week low. The Bloomberg Dollar Spot Index snapped a four-day winning streak as investors await comments by Federal Reserve Chair Janet Yellen at a symposium in Jackson Hole, Wyoming, on Friday.

A rally that’s driven global equities to their highest level in a year has petered out as the prospect of higher U.S. rates risks thwarting efforts by other central banks to stimulate growth by cutting borrowing costs. While German business confidence dropped to the lowest level in six months in August, a U.S. report on Thursday will probably show a pickup in durable goods orders.

"There is renewed caution ahead of Yellen’s appearance at Jackson Hole tomorrow,” said Michael Ingram, a market strategist at BGC Partners in London. Read more

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