* Dollar firm after G7 shows little concern at Japanese
* Yen hits fresh 4-1/2-year low vs dollar
* European shares dip from 5-year highs, Wall Street seen
* Strong dollar weighs on dollar-based commodities prices
By Marc Jones
LONDON, May 13 (Reuters) - The dollar continued to
strengthen on Monday, sending oil and gold prices lower, after
the Group of Seven backed Japan's efforts to spur growth via
aggressive monetary easing.
An unexpected rise in U.S. retail sales in April as
households bought cars, home improvement materials and a range
of other goods, also underpinned the dollar as it pointed to
underlying strength in the world's biggest economy.
Wall Street, however, was expected to see some mild profit
taking on opening following a stellar run to record highs.
The dollar, which has risen 5 percent against a
basket of major currencies since February, and double that
versus the yen, looked unlikely to buckle after officials at a
G7 meeting in Britain over the weekend showed little concern
about the yen's slump.
It hit a new 4-1/2 year high of 102.15 yen in Asian trading
and was on the front foot again at 102.96 yen and $1.2953
against the euro following the U.S. retail sales numbers.
"Yen selling will have been encouraged by the outcome from
the G7 meeting where officials reiterated that they will
tolerate yen weakness as long as it results from the use of
domestic instruments to stimulate the Japanese economy," said
Bank of Toyko-Mitsubishi currency analyst Lee Hardman.
A stronger dollar makes dollar-denominated commodities such
as oil more expensive for many countries and Brent oil prices
slipped back below $103 a barrel with ample supply
levels weighing on sentiment as well.
Weaker-than-expected industrial output data from China also
helped push oil prices lower. London copper, however,
climbed 0.2 percent, as the data raised hopes that monetary
authorities in the world's biggest metals consumer may embark on
further easing to underpin demand.
China's annual industrial output grew 9.3 percent in April,
up from a seven-month low of 8.9 percent in March but still
missing market expectations for a 9.5 percent expansion.
Spot gold, often bought as an alternative to the
dollar, fell as much as 1.5 percent to a low of $1,426.40.
European shares started the week at five-year highs but that
gave investors a reason to cash in some gains ahead of
industrial production data for the euro area on Tuesday and
first-quarter economic growth figures on Wednesday.
Europe's blue chip stocks on the FTSEurofirst 300 index
were 0.3 percent lower shortly ahead of the U.S. open
as London's FTSE 100, Paris's CAC-40 and
Frankfurt's DAX slipped 0.2 to 0.4 percent. MSCI's
global index was flat at 374.29 points.
Strategists at Deutsche Bank said the longer-term trend
remained positive, citing stronger data from the United States
and early signs of a turnaround in Europe. "We remain both
strategically and tactically positive on euro area equities,"
they wrote in a note.
Italy's three-year debt costs fell to their lowest since
January at auction on Monday as the backstop of promised ECB
support continued to bolster demand for the bonds of the euro
zone's more indebted members.
Comments from Italian Ignazio Visco, one of the European
Central Bank's top policymakers, suggesting the ECB could cut
its deposit rate below zero lifted benchmark German Bund futures
from their lowest in more than a month after a sell-off
last week on upbeat euro zone and U.S. data.
If the ECB did push its zero percent deposit rate into
negative territory, banks would effectively be charged for
parking any spare cash they don't lend.
Analysts believe that would send investors into other more
profitable ultra-safe assets such as Bunds.
"We all agreed in the (ECB Governing) Council that we have
to look with care and in that case we may reduce the
rate," Visco told CNBC in an interview.
"We think that - and I personally think that, this is
effective - the economy now is capable of taking it on board."