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GLOBAL MARKETS-Stocks fall, dollar up as data warns of sputtering recovery

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

* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh (Updates prices)

NEW YORK, Sept 23 (Reuters) - Shares fell and the dollar traded near two-month highs on Wednesday as data reaffirmed lingering concerns that new restrictions to counter coronavirus infections will hurt the economic recovery.

The speed of recovery in U.S. business activity slowed down in September, with gains at factories more than offset by a retreat at services industries, suggesting a loss of momentum in the world’s largest economy as the COVID-19 pandemic lingers.

September surveys of private sector activity also painted a gloomy picture in Europe, with rising COVID-19 infections leading to a downturn in services industries.

U.S. stocks had opened higher, tracking Europe, but turned negative after the morning data.

The Dow Jones Industrial Average fell 239.51 points, or 0.88%, to 27,048.67, the S&P 500 lost 38.66 points, or 1.17%, to 3,276.91 and the Nasdaq Composite dropped 190.93 points, or 1.74%, to 10,772.71.

The pan-European STOXX 600 index rose 0.55% and MSCI’s gauge of stocks across the globe shed 0.72%.

Emerging market stocks lost 0.49%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.02% lower, while Japan’s Nikkei lost 0.06%.

In foreign exchange markets, the standout mover was the dollar, which touched its highest level since late July against a basket of six major currencies.

“At present, the market is once again dominated by concerns about a second wave of infections, above all in Europe, meaning that the dollar is in demand again,” Commerzbank analysts wrote in a morning note.

The dollar index rose 0.281%, with the euro down 0.24% to $1.1678.

The Japanese yen weakened 0.44% versus the greenback at 105.37 per dollar, while Sterling was last trading at $1.2739, up 0.06% on the day.

Oil edged up supported by a report that U.S. fuel inventories fell, although rising crude supply and concern of stalling demand capped gains.

“Oil prices are still faring comparatively well today given all the headwinds they are facing – a firm U.S. dollar, concerns about demand, rising supply,” said Carsten Fritsch of Commerzbank.

U.S. crude recently rose 0.35% to $39.94 per barrel and Brent was at $41.84, up 0.29% on the day.

Benchmark 10-year notes last fell 5/32 in price to yield 0.679%, from 0.664% late on Tuesday.

Spot gold dropped 2.0% to $1,861.92 an ounce. Silver fell 6.40% to $22.85.

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