* Dollar lowest since Jan. 2015
* European bank shares slump
* Australia cuts rates to record low
By Jamie McGeever
LONDON, May 3 (Reuters) - The dollar slid to its lowest
against major currencies in well over a year on Tuesday, a move
led by further gains in the yen that threw an uncomfortable
spotlight on central banks' attempts to boost growth through
aggressive policy easing.
Australia's central bank joined the growing line of those
adding stimulus, surprising many investors by cutting interest
rates to a record low of 1.75 percent. That hit the currency but
lifting the country's shares.
Almost every other major stock market around the world fell.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS hit a three-week low, Europe's major indices
shed as much as 2 percent and emerging market stocks fell 1.2
percent .MSCIEF .
U.S. futures pointed to a fall of almost 1 percent at the
open on Wall Street ESc1 .
European financials fell more than 3 percent, hit by a
string of weak first quarter earnings reports from banks and the
euro's burst EUR= to an eight-month high above $1.16. European
bank stocks are down more than 20 percent so far this year.
Shares in German lender Commerzbank CBKG.DE fell almost 10
percent after profits slumped in the first quarter.
"The numbers for the first quarter did not come in well ...
however external factors that have also hit other banks hard
appear to be the main reason for that," said Landesbank
Baden-Wuerttemberg analyst Ingo Frommen.
Shares in Swiss bank UBS UBSG.S were down 8 percent, also
after first quarter results.
Europe's FTSE 300 index of leading 300 shares .FTEU3 and
Germany's DAX shed almost 2 percent .GDAXI , both falling to
their lowest in nearly three weeks.
In currency markets the yen rallied towards 105 per dollar,
its highest in 18 months JPY= .
It was as low as 122 a few months ago, and the sharp gains
since will do nothing to relieve deflationary pressures in
Japan.
The dollar index .DXY , a measure of the dollar's value
against a basket of major currencies, fell to 92.00. It was last
there in January 2015.
The yen has accelerated its ascent since the Bank of Japan
surprised markets last week by keeping monetary policy unchanged
in the face of growing headwinds for its economy.
U.S. YIELDS FALL
Japan is in the middle of its Golden Week series of
holidays. Markets were closed on Friday and will be closed from
Tuesday to Thursday this week.
In Australia, stock markets cheered the rate cut with the
benchmark index .AXJO easily the outperformer in Asia and
extending gains to close up more than 2 percent on the day.
The Australian dollar AUD=D3 dropped sharply, falling
below 0.76 against the greenback from 0.77 earlier.
Bond yields fell across the board, with the fall in U.S.
Treasury yields outpacing the decline in European yields. The
U.S. curve was down as much as 6 basis points, and the benchmark
10-year yield was at 1.81 percent US10YT=RR .
After raising interest rates in December for the first time
in nearly a decade, the Federal Reserve held monetary policy
steady last week. While it kept the door open to a hike in June,
it gave no signal that it was in a hurry to tighten further
given the economy's slowdown, even as the labour market has
improved.
"The Fed still thinks growth will be just over 2 percent
this year but, on the evidence of Q1, it seems more likely that
the euro zone will scale 2 percent, not the U.S.," said Steve
Barrow, head of G10 strategy at Standard bank.
"The upshot is that market expectations for U.S. growth
might be too high - as investors take their cue from the Fed's
forecasts - while those for the euro zone are too low."
Crude oil prices lost ground, with U.S. crude futures CLc1
down 1 percent at $44.32 a barrel.
Spot gold XAU= got a boost from the weak dollar, briefly
rising above $1,300 an ounce.
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Shanghai CSI 300 and global effects interactive https://t.co/YqIYLIbInP
Chinese A-shares vs developed and emerging stocks http://link.reuters.com/rac25w
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