European stocks hit their highest level this year today boosted by gains on Wall Street overnight and further positive data on the US economy but investors fretted that a recovery has already been factored in.
By 10:15 a.m. the FTSE Eurotop 300 index was flat at 946.2 points, having earlier hit a new 2003 high of 948.2 points.
New evidence that US businesses are expanding also failed to boost the dollar, however. It remained under pressure from concerns over the US current account deficit and Washington's handling of post-war Iraq.
"US asset markets are not performing in a way they should have when the US is truly leading a global recovery because the current account deficit is too high and there have been surprises in a recovery in other parts of the world. Concerns about Iraq and trade sanctions are also weighing," said Mr Jim McCormick, head of foreign exchange research at Lehman Brothers.
Bonds shrugged off yesterday's positive US manufacturing figures and a more than 1 per cent rise in the Dow Jones overnight as investors looked for bargains after a sell-off yesterday.
With the United States looking set to drive faster global growth, investors considered the prospect of borrowing costs globally rising sooner rather than later, eyeing decisions in Canada and Australia later on Tuesday.
The Bank of Canada is expected to leave interest rates steady at 2.75 per cent today while the Reserve Bank of Australia is expected to raise rates by 25 basis points to 5.25 per cent.
The dollar held steady versus the euro today just above the previous day's record low as evidence of a strong US recovery was again outweighed by lingering concerns about US economic imbalances.
The dollar was last trading at $1.1960, having fallen to the record low around $1.2040 in the previous session.