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LONDON: The euro dropped to its weakest since 2017 on Wednesday as investors increasingly concerned about the global growth and inflation outlook snapped up dollars, while a mixed bag of corporate earnings sent stock markets lower again.

The dollar has roared 4.3% higher in April and is on course for its best month since January 2015, propelled by mounting expectations for the Federal Reserve to hike interest rates aggressively in coming months and the US economy to hold up better than the euro zone.

Investors have been dumping the euro, and on Wednesday it dropped below $1.06 with another half a percent fall.

Analysts say it is being buffeted by the war in Ukraine and mounting worries about the single currency bloc’s economy falling into recession this year.

“The euro’s blatant inability to rally on hawkish comments by European Central Bank members means lingering vulnerability to an external environment negatively affected by an ever-concerning situation in Ukraine and generalised USD strength,” ING FX strategists wrote in a note to clients.

By 0730 GMT, the euro traded as low as $1.0588, while the dollar index rose 0.4% to 102.65, its strongest since March 2020 when fears of a market meltdown as countries went into COVID-19 lockdowns sent investors scrambling for dollars.

European stocks fell, although the drops were not as sharp as on Wall Street where the tech-heavy Nasdaq 100 closed down 3.3% at its lowest level since late 2020.

News that Russia had cut gas supplies to Poland and Bulgaria deepened worries, sending the MSCI world equity index slumping to a 13-month low.

The Euro STOXX 600 was down 0.3%, while Germany’s DAX weakened 1.2%. Britain’s FTSE 100 slipped 0.1%.

Wall Street futures pointed to a small rebound there at the open .

A mixed set of corporate earnings, including Google parent Alphabet Inc reporting its first quarterly revenue miss of the pandemic, also weighed on investor sentiment.

Investors have been focusing on results from some of Wall Street’s biggest names this week, hoping they could provide a counterweight to the deluge of negative news that has battered stocks.

Chinese rebound

There was little let-up in the selling in Asia, with MSCI’s broadest index of Asia-Pacific shares outside Japan down 0.9% to its lowest level since March 15.

Tokyo’s Nikkei fell 1.17%.

Australian shares lost 0.78% as inflation hit a 20-year high, bringing interest rate rises closer.

Battered Chinese stocks bucked the trend, gaining 2.94% as sentiment got a short-term boost from data showing profits at industrial firms grew at a faster pace in March than a year earlier.

China stocks fell to their lowest in two years on Tuesday on fears that persistent COVID lockdowns would weigh heavily on economic activity and disrupt global supply chains.

Analysts cited a loss in confidence that investors were feeling towards the Chinese government, saying more tangible measures were needed to support the market and the economy.

“Once there’s a way back to normalcy out of these lockdowns, then potentially we could see a large stimulus that would allow for consumers to come back with a vengeance and that’s when we’ll see investors regain confidence,” said Jim McCafferty, managing director for Asia-Pacific equity research at Nomura.

Worries about the conflict in Ukraine and its impact on energy markets continue to rattle investors.

Russia’s move to halt gas supplies to Poland and Bulgaria from Wednesday, viewed as a major escalation in response to western sanctions against Moscow, sent oil and gas prices higher, although not by much.

Brent crude futures were up 1% at $106.04. Brent crude prices had reached $140 in early March. US West Texas Intermediate crude futures gained 0.94% to $102.68.

In currency markets, a dominant dollar left sterling and the Japanese yen both nursing losses.

Gold prices weakened marginally, with the spot price last at $1,899, down 0.3% on the day.

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