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GLOBAL MARKETS-Dollar gains, shares extend rally before Fed release

(Adds U.S. market open; previous LONDON)

* BA owner gains on shorter quarantine hopes

* Dollar claws back from 27-month low

* Graphic: 2020 asset performance tmsnrt.rs/2yaDPgn

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

NEW YORK, Aug 19 (Reuters) - The dollar and global equities edged higher on Wednesday, with stocks on Wall Street extending their record-breaking rally, as investors set aside new U.S.-China tensions for details later in the day on Federal Reserve efforts to keep the economy humming.

The dollar index, which reflects its value against six leading trading currencies, rose to hold just above a 27-month low hit overnight, while gold fell below $2,000 an ounce, partly in response to a pause in the greenback’s slide.

Crude prices eased on concerns U.S. fuel demand faces a slow recovery amid stalled talks on an economic stimulus package in Washington and despite support from a bigger-than-expected drawdown in U.S. crude stocks.

MSCI’s benchmark for global equity markets rose 0.13% to 574.05 and Europe’s broad FTSEurofirst 300 index added 0.41% to 1,430.74.

The dollar index rose 0.192% and spot gold prices fell -0.85% to $1,983.86 an ounce.

Minutes from the Fed’s last meeting of its Federal Open Market Committee are due at 2 p.m. (1800 GMT), with investors seeking hints of further action that the U.S. central bank could take in September. No change in interest rate policy is expected until end-2021.

The Fed’s actions to blunt the impact of the coronavirus pandemic have helped lift riskier assets to all-time highs but have reduced demand for safe-havens and battered the dollar.

The likelihood of further dollar weakness could prompt gold to “carve out a more sustained presence above $2,000 and reach new record highs,” FXTM market analyst Han Tan said.

“The release of the latest FOMC minutes could offer another gust of wind in bullion bulls’ sails, especially if there is an obvious signal that the Fed is willing to tolerate faster U.S. inflation,” Tan added.

The S&P 500 and Nasdaq scaled new highs after the open as results from retailers Target and Lowe’s trounced estimates, after the S&P 500 on Tuesday completed its fastest recovery ever from a bear market to confirm a bull market.

The Dow Jones Industrial Average rose 0.39%, the S&P 500 gained 0.15% and the Nasdaq Composite added 0.07%.

Big-box chain Target Corp jumped 12% after posting its best quarterly comparable sales growth and online revenue that nearly tripled.

In Europe, travel and leisure shares rose, with British Airways owner International Airlines Group up 5.3% on a British plan to use COVID-19 testing at London’s Heathrow Airport to help cut the number of days travelers have to spend in quarantine.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside of Japan fell 0.2%, retreating from a seven-month high hit after the S&P 500’s record.

The euro fell 0.01% to $1.1928 while the Japanese yen weakened 0.13% versus the greenback at 105.52 per dollar.

Brent crude futures fell $0.58 to $44.88 a barrel. U.S. crude futures slid $0.46 to $42.43 a barrel.

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