STOXX down 1.3 on UK inflation data, luxury goods slump
NZ dollar falls on surprise central bank rate forecast
U.S. debt ceiling talks still stalled

TOKYO, May 24 Reuters Stocks lurched downwards on Wednesday as U.S. debt ceiling negotiations dragged on without resolution, stoking a general malaise in markets that saw safe haven assets like the dollar and gold hold near recent highs.

The New Zealand dollar meanwhile tumbled after the central bank caught markets offguard by flagging that its tightening cycle is over.

Europe39;s benchmark STOXX index fell 1.3 to a 3week low in early trading, as a jump in UK core inflation and more losses in marketheavy luxury names hurt risk sentiment. MSCI39;s broadest index of AsiaPacific shares fell 0.7.

Crude oil prices kept rising, though, after a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC output cuts.

The New Zealand dollar was one of the major movers in the Asian day. It dropped as much as 1.3 after the Reserve Bank wrongfooted markets by keeping its forecast for the terminal rate at 5.5, after hiking by a quarter point to that level.

It39;s an indication that the tightening cycle is over, said Jason Wong, a strategist at Bank of New Zealand. No one was really expecting that.

Market pricing had favoured a halfpoint hike, and traders were also primed for an extension of the tightening streak.

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