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GLOBAL MARKETS-Gold rallies anew on latest U.S.-China row, stocks falter

* European earnings are better-than-expected

* Markets eye escalating U.S.-China tensions

* Gold extends gains to new 9-year peak

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh

NEW YORK, July 23 (Reuters) - The dollar weakened and gold rose further on Thursday as a gauge of global equities meandered after earlier gains in Europe and Asia as rising cases of COVID-19 crimped the U.S. labor market and deteriorating U.S.-China relations gave investors pause.

The dollar hit four-month lows against a basket of peer currencies and gold rose for a fifth straight session to hit a fresh nine-year high as escalating tensions between the United States and China increased bullion’s safe-haven appeal.

Investors are selling the greenback on expectations the U.S. economy will likely underperform its peers in the developed world as the surge in new U.S. coronavirus infections pushed the overall number of cases over 4 million.

“There has been a turn in dollar sentiment,” said Marc Chandler, chief market strategist at Bannockburn Forex in New York.

The dollar index fell 0.36% at $94.6590

Better-than-expected earnings in Europe lifted regional shares, with Germany’s Daimler AG forecasting a rise in operating profit at its Mercedes-Benz division and Unilever’s second-quarter sales falling far less than feared.

Europe’s broad FTSEurofirst 300 index closed up a bare 0.08%.

Wall Street also struggled after four days of gains as investors awaited a new U.S. coronavirus relief package and the number of Americans seeking unemployment benefits unexpectedly rose last week for the first time in nearly four months.

MSCI’s benchmark for global equity markets rose 0.15%, pulled lower by Wall Street.

The Dow Jones Industrial Average fell 0.31%, the S&P 500 gained 0.02% and the Nasdaq Composite dropped 0.11%.

A further slide in U.S. Treasury yields, with the benchmark 10-year note staying below 0.6%, damped financial stocks.

“Financials are just going to have a tough time participating if we stay this low, that being the second-largest sector in the S&P 500, said JJ Kinahan, chief market strategist at TD Ameritrade in Chicago.

“It’s going t be hard to continue momentum,” he said.

The 10-year Treasury note fell 1.4 basis points to 0.5807%.

Equities have rallied to their strongest since February, with many country indices erasing their slump in March when the coronavirus pandemic sent markets into freefall.

Oil edged lower as rising U.S. fuel inventories and concerns about surging coronavirus cases outweighed the impact of a weaker dollar, which usually boosts oil prices.

Brent crude futures fell $0.25 to $44.04 a barrel. U.S. crude futures slid $0.10 to $41.8 a barrel.

Spot gold prices rose 1.28% to $1,895.66 an ounce, about $25 from their all-time peak in September 2011.

Investors have flocked to the safe-haven metal as they seek shelter from a potential reversal in pumped-up stock prices and a possible rise in inflation following so much monetary and fiscal stimulus around the world.

In currency markets the euro was up 0.1% to $1.1583, close to the 21-month high of $1.1601 it touched on Wednesday as agreement between European Union members on a large economic recovery fund continued to provide lift.

Traders pleased with the deal have also pushed Italian borrowing costs lower, and yields on 10-year government debt dropped to a new 4-1/2 month low, moving closer to 1%.

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