* Dollar starts week in positive territory
* Fed’s Yellen may give rate hint on Friday
* Oil prices fall nearly 3 percent; metals slide (Updates to afternoon U.S. trading)
By Hilary Russ
NEW YORK, Aug 22 (Reuters) - U.S. stocks and oil edged lower while U.S. Treasury yields fell on Monday on expectations the Federal Reserve will signal this week that it is preparing to raise U.S. interest rates.
An upbeat assessment of the U.S. economy’s strength from Fed Vice Chairman Stanley Fischer on Sunday was viewed as raising the prospect of Fed Chair Janet Yellen flagging a rate rise at a meeting with world central bankers on Friday.
Treasury yields rose in overnight trading on Fischer’s comments but fell back in early trading. Prices on 30-year U.S. Treasuries rose more than 1 point and yields fell to 2.23 percent. Ten-year notes US10YT-RR were last up nearly 0.40 percent in price to yield 1.54 percent. Bond yields move inversely to prices.
The dollar index, which tracks the greenback against a basket of six major currencies, shed gains and was up just .03 percent at 94.54. It had fallen about 1.3 percent last week.
The euro turned slightly negative, losing 0.04 percent against the dollar at $1.1323.
“Fischer didn’t necessarily state when the Fed has decided to hike rates, but his remarks seemed to be alluding that a rate hike might be ‘round the corner,” said Craig Erlam, a senior market analyst at OANDA.
U.S. stocks zig-zagged in early trading, opening lower, regaining momentum to turn positive, and then dropping again.
The Dow Jones industrial average fell 14.21 points, or 0.08 percent, to 18,538.36, the S&P 500 lost 1.42 points, or 0.07 percent, to 2,182.45 and the Nasdaq Composite added 3.19 points, or 0.06 percent, to 5,241.57.
European stocks initially slipped but recouped losses to rise 0.09 percent, getting a temporary boost in early trading after Syngenta’s proposed takeover by ChemChina was approved by U.S. regulators.
Oil prices fell 3 percent as China ramped up exports of refined products, U.S. oil producers added rigs for an eighth straight week and prospects emerged for increased exports from Iraq and Nigeria.
Brent crude futures dropped 3.36 percent, or $1.71, to $49.16 a barrel, while U.S. crude oil futures settled 3 percent, or $1.47, lower at $47.05.
Because of the production and storage overhang in fuel markets, Barclays said this month’s 20 percent price rally is unwarranted and that oil prices of $50 or higher are unsustainable.
“Oil prices will likely experience another short-term dip in the coming weeks,” it added.
Investors are waiting for this week’s gathering of central bankers in Jackson Hole, Wyoming, on Thursday, with Yellen due to speak the following day.
Interest rate futures contracts indicate the market is pricing in about 50/50 odds of a U.S. rate increase by the end of the year.
Emerging stocks and currencies also fell broadly on Monday. MSCI’s emerging equity index slipped 0.7 percent to the lowest in more than a week.
Many emerging countries borrow heavily in U.S. dollars, meaning an appreciation in the greenback makes it more expensive for them to service their debt.
Gold fell to its lowest in two weeks on talk of possible U.S. rate hikes, before recovering slightly.
Silver, copper and nickel prices also tumbled to fresh lows.
“Metals are trading on the dollar and the latest copper export data from China doesn’t help,” Commerzbank analyst Eugen Weinberg said.
Spot gold was down 0.21 percent at $1,338.43 an ounce, having hit a low of 1,331.35 an ounce at one stage.
For Reuters new Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Reporting by Hilary Russ in New York; Additional reporting by Ahmad Ghaddar, Jan Harvey and Pratima Desai in London; Sam Forgione and Karen Brettell in New York; Editing by Toby Chopra and Dan Grebler)