The dollar fell against the euro

The FTSE rose after banks gained after news came in that the British government is expecting lenders to pay an extra 800 million pound as tax. Whereas, the DAX and the CAC fell a bit after China raised interest rates.Ben Critchley, a sales trader at IG Index, said: “It is likely to remain more of a political football than one actually affecting investors' views toward the major UK banks.”Another expert, Joshua Raymond, market strategist at City Index, said: “The move by China to hike interest rates ... is a move to curb spiraling inflation and normalize growth, not impede it." rnThe DOW gained but the volume was light as investors were still cautious to buy equities. Peter Boockvar,equity strategist at Miller Tabak & Co in New York, said: “The light volume, textbook wise, tells you this market is running on fumes. But that doesn't mean it can't continue."There were limited gains of S&P and Nasdaq after China raised its interest rates again in six weeks. Michael Mullaney, a portfolio manager at Fiduciary Trust Co in Boston, said: “The rate hike is important, but it isn't at a critical level where it becomes troublesome." rnOil fell again after China raised its interest rates, making energy,industrial metals and soybeans costlier, since China is world's biggest buyer of these. Because of this move demand for oil also reduced.Filip Petersson, an analyst at Stockholm based bank SEB AB, explained why and how will this rate hike effect China and the world: “The hike is mainly an effort to cool down the economy, which is more or less the same thing as saying that you want to cool down energy and industrial metal consumption. If you take things one step further, there is a fear that the Chinese economy could overheat and get out of control and that Chinese authorities will have to go to extreme measures to cool it down, thereby triggering a hard landing of the economy, which would have a major impact on industrial metals and energy consumption.” rnThe dollar fell against the euro and other major currency counterparts after China raised its interest-rates. The dollar however rose against the yen as Treasury yields gained after a $32 bn note sale.Mark McCormick, a New York-based currency strategist at Brown Brothers Harriman & Co, said: “Market participants have understood that China is intently trying to slow their economy down and most people feel it’s going to be a soft landing, so that supports the risk backdrop for commodity currencies over the long term. The market today is being driven by dollar weakness outside of strength of any other currency.”The pound fell against the euro, after UK Chancellor of the Exchequer George Osborne raised tax on banks. Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank in London, said: “Pound has been sold across the board after Mr. Osborne’s comments. It’s a knee- jerk reaction to the higher bank levy. The UK economy, whether you like it or not, is still heavily reliant on the financial sector,so anything that adversely affects it will be reflected in the currency.”rnThe Nikkei touched a new high after investors in Asia went in for risky assets on hopes of a steady recovery. Toyota as a company profited from 99.07 billion yen , which also beat analyst estimates.Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities,said: “The performance of all emerging markets, including Brazil, India, Indonesia and China has been very weak this year and the shift of market focus to developed economies with lower inflationary risk is helping Tokyo stocks."But Fujito feels profit taking could limit rise of the Nikkei. He said: "If the Nikkei's rise continues, it won't be rapid as Japanese institutional investors are lowering their holdings of Tokyo equities and take every opportunity to lock in profits on outperforming stocks.”rnUS Bonds fell as the Federal Reserve is prepared to purchase up to $2.5 bn in Treasuries which are going to be matured between August 2028 and November 2040. Ian Lyngen, a government bond strategist at CRT Capital Group LLC in Stamford, Connecticut, said: “The long bond caught a bid ahead of the long-end buyback tomorrow, which has flattened the curve some. The Fed’s involvement and the higher- yield levels there should drive demand at the week’s sales.”Yields on 30-year notes fell.rnThe DOW gained but the volume was light as investors were still cautious to buy equities. Peter Boockvar,equity strategist at Miller Tabak & Co in New York, said: “The light volume, textbook wise, tells you this market is running on fumes. But that doesn't mean it can't continue."There were limited gains of S&P and Nasdaq after China raised its interest rates again in six weeks. Michael Mullaney, a portfolio manager at Fiduciary Trust Co in Boston, said: “The rate hike is important, but it isn't at a critical level where it becomes troublesome."rnGold rose as inflation fears kept investors glued to safe assets. Rick Bensignor, chief market analyst at investment bank Dahlman Rose, said: “Gold has continued its uptrend since it has broken above its down trendline from the January high, and it has gotten through the 20-day moving average which was held for several days."US Gold futures for April delivery settled up $15.90 to $1,364.10 an ounce.