The dollar was on the defensive yesterday, a day after its worst drubbing in five months, as the biggest slump in Chinese stocks in almost two years took the shine off another record high in a global equities bull run.

The near three per cent drop in China reflected its recent bond markets worries, adding to a subdued mood in Europe where, with trading constrained by the Thanksgiving holiday in the United States, the main bourses opened in the red for the 10th day in the last 13.

Surveys covering Europe’s services and manufacturing industries outshone the most optimistic forecasts in Reuters polls, with factories having the second-best month in the index’s history.

That helped some European stock markets regain lost ground, and by in the afternoon the pan-European STOXX 600 was up 0.1 per cent after opening 0.3 per cent lower.

The MSCI world equity index, which tracks shares in 47 countries, was up 0.1 per cent, having earlier touched a record high. Britain’s FTSE 100 was down 0.2 per cent, trimming opening losses of 0.5 per cent. One of the index’s heavyweight utilities Centrica crashed over 16 per cent in what could be is biggest daily drop ever.

Moves were expected to be minor in light of Thanksgiving. Japanese markets had also been closed, though there was no shortage of action in Asia.

The dollar’s rout took it as low as 111.07 yen after minutes of the Federal Reserve’s last meeting showed many participants were concerned inflation would stay below the bank’s two per cent target for longer than expected.

That view echoed comments from chair Janet Yellen and led markets to pare back pricing for more rate hikes next year.

The dollar clawed back to 111.14 yen in Europe but the overnight move was its largest single-day fall against the Japanese currency since May.

Meanwhile, borrowing costs in the euro area also crept up with minutes from the European Central Bank’s October meeting, at which monthly asset purchases were extended well into 2018 albeit at a reduced pace, due later alongside a number of ECB speakers.

Against a basket of currencies, the dollar stood at 93.086, having shed 0.75 per cent overnight.

The euro was enjoying the view at $1.1850 after climbing from $1.1731 on Wednesday.

Commodities were pushed onto the back foot again as the dollar started to recover in Europe. Gold was flat at $1,292.02 an ounce having added 0.9 per cent overnight.

Oil prices paused after hitting their highest in more than two years after the shutdown of one of the largest crude pipelines from Canada cut supply to the United States.

US crude futures eased back 12 cents to $57.86 a barrel, after jumping two per cent on Wednesday to ground last trod in mid-2015. Brent crude dipped 0.6 percent to $62.92 a barrel.

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