(Adds U.S. market open, byline, dateline; previous LONDON)
* Euro zone bond yields resume rise as focus shifts to Fed
* Wall St turns lower on Trump Jr emails
* Dollar hits 4-month high vs yen
By Herbert Lash
NEW YORK, July 11 (Reuters) - The dollar hit a four-month high against the yen but global equity markets turned lower on Tuesday as investors awaited testimony by Federal Reserve Chair Janet Yellen this week and any signs of tighter U.S. monetary policy.
MSCI’s measure of stock performance world-wide stock initially rose, lifted by expectations of robust global growth.
U.S. stocks reversed early gains to edge lower after President Donald Trump’s eldest son released an e-mail chain related to a meeting with a Russian lawyer linked to the Kremlin during last year election campaign.
“People are worried that it just means more political uncertainty, and sort of a continuation of the stalemate in Washington, a continuation of the delay in trying to get the Trump agenda passed through Congress,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.
Europe’s main bourses earlier had faltered despite a fresh flurry of M&A activity.
The dollar initially edged higher against a basket of currencies on the back of the past fortnight’s 25 basis-point rise in the yield of benchmark 10-year U.S. Treasury bonds.
Interest rates are on the rise globally as the Fed is expected to tighten further this year, the Bank of Canada will likely raise rates this week, comments suggest tighter European Central Bank policy and chatter from the Bank of England.
“For the first time in a very long time, you have a number of central banks directionally tightening their monetary policy. So this is putting upward pressure on interest rates and the U.S. dollar,” said Michael Arone, chief investment strategist at State Street Global Advisors in Boston.
A stronger dollar and rising rates are creating a push and pull in equity market leadership, Arone said.
Value-oriented equities and more cyclical sectors are doing well, but when these come under question, more growth-oriented stocks, such as technology, or more income-oriented sectors, like utilities and staples, do well, he said.
“You have this real tug of war between these two camps and it’s unclear right now how we’re going to come out of that,” he said.
MSCI’s all-country world stock index fell 0.11 percent, while the pan-European FTSEurofirst 300 index of leading regional shares slid 0.71 percent to a provisional close of 1,490.15.
Wall Street was down, but well off its lows of the session.
The Dow Jones Industrial Average fell 3.72 points, or 0.02 percent, to 21,404.8. The S&P 500 lost 4.83 points, or 0.20 percent, to 2,422.6 and the Nasdaq Composite added 1.99 points, or 0.03 percent, to 6,178.38.
The Japanese yen gained 0.11 percent versus the greenback at 114.16 per dollar. The dollar index reversed course to fall 0.04 percent, while the euro rose 0.26 percent to $1.1429.
Euro zone bond yields resumed their march upwards as the focus shifted to the pace of monetary tightening and when the U.S. central bank might start unwinding its massive balance sheet.
Germany’s 10-year yield edged up 1 basis point to 0.55 percent, reversing some of a near 4 basis point fall on Monday, its biggest daily drop in around a month.
Yields across the bloc fell on Monday, retracing some of a sharp rise seen over the last two weeks in which the benchmark German 10-year yield has more than doubled on the growing view that the European Central Bank will begin reining in its ultra-loose policy sooner rather than later.
U.S. Treasuries edged higher in quiet trading, tracking modest gains in Europe, as investors focused on a key testimony from Yellen in Congress, which could shed more light on the pace of U.S. monetary tightening.
Yellen will deliver her semi-annual monetary policy testimony before the House Financial Services Committee on Wednesday and the Senate Banking Committee on Thursday.
Benchmark 10-year Treasury yields rose to 2.383 percent from 2.371 percent late on Monday.
Crude oil was higher. Benchmark Brent crude rose 31 cents to $47.19 a barrel. U.S. light, sweet crude rose 30 cents lower to $44.70.
Reporting by Herbert Lash; Editing by Nick Zieminski