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World stocks steady, Bitcoin slides

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·3-min read
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Global shares have steadied around 1 per cent below record highs reached earlier this week, though Bitcoin hit its lowest in nearly seven weeks as investors assessed the impact of a possible US capital gains tax hike.

President Joe Biden will roll out a plan to raise taxes on the wealthiest Americans, including the largest-ever increase in levies on investment gains, to fund about $US1 trillion in childcare, universal pre-kindergarten education and paid leave for workers, sources familiar with the proposal said.

Biden's administration is seeking an increase in the capital gains tax to near 40 per cent for wealthy individuals, almost double the current rate, the sources said.

"The devil is always going to be in the detail," said Ned Rumpeltin, European head of currency strategy at TD Securities, adding that the Democrats' narrow majority could make the proposals hard to pass.

The Dow Jones Industrial Average ended down nearly 1 per cent and European stocks dipped 0.2 per cent, though S&P futures gained 0.25 per cent at 0814 GMT.

Bitcoin dropped below the $50,000 level to its lowest level in nearly seven weeks, down 7 per cent. Ethereum slid more than 10 per cent to $2,165

World stocks edged up 0.1 per cent but stuck below record highs close to 3,000 set on Monday.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.65 per cent, with Chinese blue-chip shares up 0.91 per cent, supported by green and healthcare stocks. Japan's Nikkei stock index slid 0.57 per cent.

"The move on the Dow overnight I think needs to be seen in the context that it's had a remarkable run up," said James McGlew, executive director of corporate stockbroking at Argonaut.

"I don't think people are completely negative on the fact that those tax changes are being flagged. Ultimately it's money that will feed back into the economy."

The euro zone economy will grow more slowly this year than earlier thought and a temporary gain in inflation is likely to exceed a previous projection, a European Central Bank survey showed on Friday, a day after the bank left policy unchanged.

However, IHS Markit's flash Composite Purchasing Managers' Index, seen as a good guide to economic health, rose to a nine-month high of 53.7 in April, confounding expectations in a Reuters poll for a dip to 52.8. Anything above 50 indicates growth.

The euro rose 0.3 per cent on the day to $1.2052 after dipping a day earlier, within sight of a seven-week high hit earlier this week.

The dollar was steady against the yen at 107.91 and the dollar index, which tracks it against a basket of currencies of other major trading partners, fell 0.27 per cent.

The yield on benchmark 10-year Treasury notes was higher at 1.5613 per cent after the capital gains tax reports pulled yields lower on Thursday. Germany's 10-year government bond yield, the benchmark of the euro area, was flat.

Oil prices rose, buoyed by hopes demand will recover as economic growth picks up and lockdowns ease. Worries about India's surging second wave of COVID-19 cases limited gains.

US crude rose 0.38 per cent to $61.81 a barrel and global benchmark Brent crude added 0.38 per cent to $65.65 per barrel.

Spot gold dipped 0.1 per cent to $1,782 per ounce but was still set for a weekly rise on soft Treasury yields and a subdued dollar.