November 20, 2019 / 4:14 PM / 24 days ago

GLOBAL MARKETS-Shares slide on U.S.-China spat over Hong Kong, dollar gains

* World stocks down 0.25%, Wall Street trades mixed

* European shares slide but pare losses of more than 1%

* U.S. Treasury yields fall further

* Next major event is minutes of Fed’s last meeting

By Herbert Lash

NEW YORK, Nov 20 (Reuters) - Global stock markets stumbled and the dollar climbed on Wednesday after China condemned U.S. Senate legislation aimed at protecting human rights in Hong Kong, the latest obstacle to reaching a deal in a prolonged Sino-U.S. trade dispute that has weighed on growth worldwide.

Gold prices rose to their highest in nearly two weeks before paring gains, while the yield on Germany’s 10-year bond tumbled to a 2-1/2 week low as worries over the direction of U.S.-China trade talks swept world markets.

The dollar edged higher, fueled by the worsening trade tensions, ahead of the 2 p.m. ET (1900 GMT) release of minutes from the Federal Reserve’s policy-setting meeting in October when it raised interest rates a third time this year.

The MSCI gauge of stocks across the globe shed 0.24%, damping an equity market rally that has pushed the index up almost 20% so far this year.

Germany’s DAX, the most trade-sensitive among Europe’s regional indexes, dropped 0.52%, halving earlier losses.

Failure to resolve the 16-month trade war has kept equity markets from further accelerating, said Rick Heckler, a partner Cherry Lane Investments in New Vernon, New Jersey.

The U.S. Senate unanimously passed legislation on Tuesday aimed to protect human rights in Hong Kong amid China’s crackdown on the pro-democracy protest movement.

China’s foreign ministry said the United States should stop interfering in Hong Kong and Chinese affairs.

“It’s a real concern that the Chinese are angered by it (the Senate vote), and moved any resolution further away from what already has been very difficult negotiations,” Heckler said.

Investors are worried about a hardening of the trade war rhetoric. The United States would raise tariffs on Chinese imports if a trade deal is not reached, President Donald Trump said on Tuesday.

In Europe, the pan-regional STOXX 600 index lost 0.55% while the emerging markets index slid 0.45%.

Stocks traded mixed on Wall Street. The Dow Jones Industrial Average fell 64.68 points, or 0.23%, to 27,869.34 and the S&P 500 lost 1.83 points, or 0.06%, to 3,118.35. The Nasdaq Composite added 5.62 points, or 0.07%, to 8,576.27.

The dollar index, tracking the unit against six major currencies, rose 0.08%, with the euro down 0.07% to $1.107. The Japanese yen weakened 0.15% versus the greenback at 108.73 per dollar.

Yields on government 10-year debt across the euro area fell 3 to 4 basis points, after trading in a narrow range the past two sessions.

In Germany, the yield on the 10-year bund fell to as low as -0.384%, down 16 basis points from five-month highs hit earlier this month.

Yields on the benchmark 10-year U.S. Treasury note rose 10/32 in price, pushing its yield down to 1.7534%.

Oil prices were up more than 1% after a better-than-expected U.S. crude inventories report and as Russia said it would continue its cooperation with OPEC to keep the global oil market balanced.

Brent crude futures were up $1.10, or 1.8%, to $62.01 a barrel, while WTI crude futures gained $1.02, or 1.9%, to $56.23 a barrel.

Gold steadied after touching a two-week high earlier in the session, as investors awaited further clues on Fed monetary policy.

Spot gold dropped 0.2% to $1,469.03 an ounce.

Reporting by Herbert Lash; Editing by Bernadette Baum

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