* Global stocks near 13-month high
* U.S. treasury yields fall for second straight day
* Oil prices dip as market skeptical of output deal
(Updates to U.S. market open; changes byline, dateline)
By Chuck Mikolajczak
NEW YORK, Sept 7 A gauge of global equity
markets moved to a near 13-month high on Wednesday and U.S.
Treasury yields fell for a second straight session as
expectations for a rate hike by the U.S. Federal Reserve this
year continued to fade.
A weaker-than-expected August employment report on Friday
and Tuesday's soft data on the services sector have crimped
expectations the Fed will boost interest rates when it meets
next week and for the rest of the year.
The probability for a rate hike in September stands at 15
percent, according to CME's FedWatch tool, while expectations
for a hike in December have fallen back below 50 percent.
Investors had been pricing in greater chances of a rate hike
this year after hawkish comments from several Fed officials.
The Federal Reserve is scheduled to release its Beige Book -
a summary of commentary on economic conditions - at 2 p.m. EDT
(1800 GMT) on Wednesday. That will be parsed by investors for
"We've had three to four pieces of relatively disappointing
economic data, so that puts some focus on today's Beige Book,"
said Art Hogan, managing director of Wunderlich Equity Capital
The Dow Jones industrial average fell 37.8 points, or
0.2 percent, to 18,500.32, the S&P 500 lost 2.88 points,
or 0.13 percent, to 2,183.6 and the Nasdaq Composite
added 0.34 points, or 0.01 percent, to 5,276.25.
U.S. stocks were led lower by the consumer staples sector
, off 0.8 percent. General Mills shares lost
2.9 percent to $68.86 after the company said its first-quarter
organic net sales will be below its full-year guidance range.
Emerging market shares led the charge, touching
their strongest levels since July 2015 as investors sought
returns with interest rates likely to stay low for a prolonged
European shares reversed early losses, with the FTSEurofirst
300 up 0.3 percent. MSCI's all-country world index
edged up 0.01 percent after touching an intraday
high of 424.71, its highest level since August 11.
Oil prices dipped as many market participants remained
doubtful producers would reach a deal to freeze output. Brent
futures were off 0.3 percent at $47.11 and U.S. crude
shed 0.2 percent at $44.73 a barrel.
Falling expectations for a rate hike sent U.S. Treasury
yields lower, with benchmark 10-year Treasury notes
were up 1/32 in price to yield 1.5391 percent, from 1.543
percent on Tuesday. Yields fell as low as 1.519 percent, a
Euro zone government bond yields fell as some investors bet
the weak U.S. data, which followed weaker-than-expected jobs
numbers on Friday, would pressure the European Central Bank to
ease monetary policy further. The ECB meets on Thursday.
The dollar was last down 0.3 percent at 101.71 yen,
having fallen as low as 101.18, its weakest since Aug. 16, after
a report from the Sankei newspaper that Bank of Japan
policymakers are divided ahead of the central bank's next
The dollar index, which measures the greenback
against a basket of major currencies, edged up 0.14 percent
after a drop of more than 1 percent on Tuesday.
(Additonal reporting by Yashaswini Swamynathan; Editing by Nick