(Adds U.S. market open, byline)
* China's Hong Kong security law rattles markets
* Stocks slip, oil prices tumble more than 4%
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Herbert Lash and Dhara Ranasinghe
NEW YORK/LONDON, May 22 (Reuters) - Global equity markets
edged lower on Friday as Beijing moved to impose a new security
law on Hong Kong after last year's pro-democracy unrest, further
straining U.S.-China ties that cast a pall over recovery
prospects and sent oil prices tumbling.
News that China also dropped its annual economic growth
target for the first time added to concern about the fallout
from the COVID-19 pandemic, boosting safe-havens such as U.S.
Treasuries and the dollar.
China said it would impose new national security legislation
on Hong Kong, leading U.S. President Donald Trump to warn that
Washington would react "very strongly" against an attempt to
gain more control over the former British colony.
Emerging market shares were hit hard by the latest salvo,
falling -2.65%. But stocks in Europe and on Wall Street slid
only a bit, also weighed down by investors eyeing a long weekend
in the United States, the UK and elsewhere.
Tensions between the world's two largest economies have
risen in recent weeks, with Washington ramping up criticism of
China over the origins of the pandemic.
"You have these doubts over China that is triggering this
sell-off in oil, and it's going to gain steam. If oil sells off,
it's hard to have a strong stock market," said Ed Moya, senior
market analyst at OANDA in New York.
Crude oil has rebounded the most of the major asset classes
on hopes world economies would soon recover from
coronavirus-induced business shutdowns, he said.
Oil is vulnerable because the rally was overdone, he said.
"There's just too much uncertainty, and that's going to
likely keep on weighing on risk appetite," Moya said.
MSCI's all-country world stock index shed
0.77%, while the pan-European STOXX 600 index rose
0.02%.
On Wall Street, the Dow Jones Industrial Average fell
133.26 points, or 0.54%, to 24,340.86. The S&P 500 lost
10.66 points, or 0.36%, to 2,937.85 and the Nasdaq Composite
dropped 24.14 points, or 0.26%, to 9,260.74.
Earlier in Asia, Hong Kong's Hang Seng index slid
more than 5% to a seven-week low, its biggest daily percentage
fall since 2015. MSCI's broadest index of Asia-Pacific shares
outside Japan lost 2.7%; Japan's Nikkei
fell 0.8%.
Analysts said extensive central bank stimulus continues to
underpin sentiment.
Japan's central bank unveiled a lending program to channel
nearly $280 billion to small businesses hit by the coronavirus.
India slashed rates for a second time this year and in the
minutes from its last meeting, the European Central Bank said it
is ready to expand emergency bond purchases as early as June.
U.S. crude fell 3.69% to $32.67 per barrel and Brent
was at $34.63, down 3.97% on the day.
The dollar index rose 0.39%, with the euro
down 0.49% to $1.0895. The Japanese yen strengthened
0.11% versus the greenback at 107.51 per dollar.
Benchmark 10-year U.S. Treasury yields fell 2.4 basis points
to 0.6526%. Spot gold added 0.4%.
(Reporting by Dhara Ranasinghe; Editing by Jane Merriman,
Kirsten Donovan, Chizu Nomiyama and Dan Grebler)