(Corrects price of platinum in the last paragraph)
* Euro falls below $1.07
* Commodities slide sharply
* US-German 5-year bond yield spread widest since 1999
By Jamie McGeever
LONDON, Nov 12 (Reuters) - A signal from European Central
Bank president Mario Draghi that further policy easing is coming
next month pushed the euro and government bond yields lower on
Thursday but failed to lift stocks, which buckled under the
weight of gloomy corporate news.
The gap between 5-year U.S. and euro zone bond yields hit
its highest since 1999, while the dollar's rebound helped push
crude oil to lows not seen since late August and copper to a
six-year low.
In an address to the European Parliament, Draghi said
inflation dynamics had somewhat weakened and that a "sustained
normalisation" of inflation could take longer to achieve than
thought. ID:nF9N12D00G
"Draghi's comments on risks to growth and inflation suggest
even more clearly than the last press conference that the ECB
will likely act in December," said Holger Schmieding, chief
economist at Berenberg Bank in London.
"Although the debate at the ECB seems to be far from over,
the fact that Draghi made these comments in a high-profile
setting suggest that he is confident that the majority of the
ECB council will support him."
Earlier on Thursday, ECB executive board member Benoit
Coeure said the debate on more stimulus next month was still
open. But Draghi's testimony trumped that and fixed income and
currency markets reacted.
German 10-year yields fell 1 basis point to 0.60 percent
DE10YT=TWEB , having opened the day higher. All other euro zone
yields were down on the day.
Expectations for ECB easing are in sharp contrast to those
for U.S. monetary policy. Most investors are betting that last
Friday's stellar U.S. employment report has set the seal on the
Federal Reserve raising rates at its meeting next month.
Illustrating that divergence, the gap between U.S.
US5YT=RR and German five-year yields DE5YT=RR rose to 181
basis points, the highest since 1999.
The euro fell as low as $1.0691 EUR= and hit a three-month
low against sterling at 70.41 pence EURGBP=D4 . At 1230 GMT the
single currency was still down on the day but had recovered a
good chunk of these losses, trading at $1.0715 and 70.55 pence.
The dollar index .DXY , which tracks the currency against a
basket of six major peers, edged up 0.1 percent to 99.15, moving
back towards a seven-month peak of 99.504 scaled on Tuesday.
COMMODITIES ROUT
In equities, the pan-European FTSEuroFirst 300 .FTEU3 was
down 0.5 percent at 1,487 points, having risen as much as 0.5
percent on Draghi's comments.
Germany's DAX .GDAXI was down 0.4 percent, France's CAC 40
.FCHI down 0.8 percent and Britain's FTSE 100 .FTSE down 0.5
percent.
The positive impact from Draghi's comments was fleeting, and
investors quickly focused on the negative implications for
equities.
"It depends on whether markets focus on the stimulus angle
or see the move as a sign that the economic situation is worse
than feared. The fact that the ECB seems to be gravitating
towards a deposit rate cut also is bad news for banks and
insurers," Action Economics wrote in a note to clients.
Euro zone financials .SX7E were among the biggest losers,
down 1 percent, but the talk of the stock market was British
engine-maker Rolls-Royce RR.L , which issued its fourth profit
warning in just over a year.
Its shares plunged more than 20 percent. ID:nFWN13705N
U.S. stock futures pointed to a flat open on Wall Street
ESc1 .
Earlier in Asia, stocks shrugged off the overnight fall on
Wall Street as oil bounced back from its lowest in over two
months and a bumper Australian employment report sent out
encouraging signals on the region's economy.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.9 percent, while Japan's Nikkei ended
flat on the day .N225 .
The biggest move across major Asian markets was the
Australian dollar, which jumped more than 1 percent to $0.7150
AUD= after figures showed that the country's economy created
58,600 jobs last month. ID:nL3N137089
U.S. crude futures CLc1 were lower in Europe, sliding
again after Wednesday's 3 percent slide on worries about higher
crude inventories.
They were last down 1 percent at $42.52 a barrel and Brent
crude LCOc1 was down 0.7 percent at $45.46, both the lowest
since August 27.
Copper futures in London hit a 6-year low of $4,851 a tonne
CMCU3 and platinum hit its lowest since late 2008 at $868.75
an ounce XPT= .