* U.S. futures, European stocks drop 0.5-0.8%
* Dollar index eyes weekly gain
* GameStop price nearly doubles in U.S. pre-market
* Bitcoin jumps 14% after Elon Musk mention
By Carolyn Cohn
LONDON, Jan 29 (Reuters) - U.S. stock futures and European
stocks fell on Friday while the safe-haven dollar held its
ground as a Wall Street battle between hedge funds and retail
investors and a row in Europe over COVID-19 vaccine supply
cooled risk appetite.
Wall Street has been gripped by an assault by small traders
organising over online forums, such as Reddit, to force hedge
funds to reverse short positions - or bets that stocks would
fall - on companies such as GameStop GME.N and AMC
Entertainment AMC.N .
The stand-off comes after central bank and government
stimulus have propelled stock markets to record highs in recent
weeks, encouraging involvement by retail investors.
"There's fear in terms of the volatility," said Derek
Halpenny, head of research for global markets at MUFG. "Specific
trades in pockets of the market can spread into the broader
market."
Shares in GameStop GME.N , AMC Entertainment AMC.N and
BlackBerry BB.N plunged more than 40% on Thursday after
several online platforms imposed buying halts, but rebounded as
Robinhood and Interactive Brokers eased the restrictions on
Friday. GameStop shares nearly doubled and AMC Entertainment was up
55% in U.S. pre-market trade.
"Any hedge fund will be carefully looking at all their
shorts after this week and regulators will look very carefully
at collective retail trading," Deutsche Bank analysts said.
S&P 500 futures ESc1 recouped some ground in European
trade but were down 0.5% by 1138 GMT. Nasdaq 100 futures NQc1
fell 0.7% .
Britain's FTSE 100 index .FTSE fell 0.8% and European
stocks .STOXX dropped 0.7%.
VACCINE ROW
Delays in COVID-19 vaccine production have snowballed into a
spat between Britain, the European Union and drugmakers over how
best to direct limited supplies. AstraZeneca AZN.L offered eight million more doses of its
COVID-19 vaccine to the European Union, after it unexpectedly
announced cuts in supplies last week. But the bloc said that was
far short of what was originally promised, an EU official told
Reuters on Friday. New variants of the novel coronavirus have also prolonged
lockdowns and delayed expectations of an economic rebound.
Barclays analysts, however, said that "institutional
positioning is not aggressive overall, and as long as vaccines
work and central banks stay put, buy-the-dip mentality should
continue".
Click here http://tmsnrt.rs/2EmTD6j for an interactive chart
on the vaccine race
The U.S. dollar rose to its highest since mid-November
against the yen JPY=EBS , and was steady against an index of
currencies =USD , bringing its weekly rise to 0.4%. The euro
EUR= edged up 0.1% and the pound GBP= was steady.
Bitcoin BTC=BTSP jumped as much as 14% to a two-week high
after Tesla Inc TSLA.O chief Elon Musk tagged the cryptocurrency
in his Twitter biography. French 10-year government bond yields FR10YT=RR , which
move inversely to price, rose four basis points after France's
gross domestic product contracted less than expected in the
fourth quarter of 2020.
World stocks .MIWD00000PUS fell 0.4% towards three-week
lows set in the previous session, and were heading for a weekly
fall of more than 2%.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1%, on course for a weekly loss of 4.4%.
Japan's Nikkei .N225 fell 1.9%, recording its first weekly
loss of the year.
The People's Bank of China (PBOC) injected 100 billion yuan
into the financial system on Friday, following a week of
reducing liquidity, which had sparked concerns the central bank
was in fact tightening monetary policy.
The extra money did little to loosen short-term money
markets, where rates rose for a fifth straight day and benchmark
overnight repo rates CN1DRP=CFXS surged to their highest in
nearly six years. Oil prices rose within recent ranges, with concerns caused
by the new coronavirus variants and slow vaccine rollouts
offsetting a cut in Saudi Arabian oil supply and falling U.S.
oil inventories. O/R
Brent crude futures LCOc1 were up 0.88% at $56.02 a barrel
and U.S. crude futures CLc1 rose 0.5% to $52.60 a barrel.
Gold XAU= benefited from demand for safer assets, rising
1.1%.
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Global assets http://tmsnrt.rs/2jvdmXl
Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
Emerging markets http://tmsnrt.rs/2ihRugV
MSCI All Country World Index Market Cap http://tmsnrt.rs/2EmTD6j
Hedge funds scrambling to exit shorts, cut losses https://tmsnrt.rs/3prlMgN
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