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GLOBAL MARKETS-Stocks dip but set for fifth month of gains; dollar weak

Mon, 31st Aug 2020 19:31

* World stocks pull back from record

* S&P poised for best August since 1984

* Dollar hits two-year trough as Fed commits to easy policy
(Updates with close of European markets; updates prices)

By Chuck Mikolajczak

NEW YORK, Aug 31 (Reuters) - A gauge of global stocks pulled
back from a record high on Monday but was poised for a fifth
straight month of gains while the dollar remained lethargic as
investors adjust to the policy shift outlined by Federal Reserve
Chair Jerome Powell last week.

U.S. stocks were mixed, with the Dow Industrials in the red,
the S&P 500 near unchanged while the Nasdaq rose solidly. The
S&P is up more than 7% for the month, putting it on track for
its best August since 1984; August is traditionally a softer
month for stock performance.

The Nasdaq is on track to best the S&P's performance for the
month, up nearly 10%.

"It's back to Nasdaq leadership and profit-taking in other
parts of the market," said Liz Ann Sonders, chief investment
strategist at Charles Schwab. "I worry that sentiment has gotten
frothy and there's a lot of money in the market that doesn't see
any downside risk."

Fed Vice Chair Richard Clarida on Monday expanded on
Powell's comments from last week, saying that with the U.S.
central bank's new policy view, a low rate of unemployment does
not on its own trigger higher interest rates. Last week, the Fed
said its new strategy plan is to use higher inflation when the
economy is robust to offset the impact of periods of weaker
prices.

Monday marked the day first trading day for the revamped
Dow, with Salesforce.com, Amgen Inc and
Honeywell International Inc joining the 30-component
index and Exxon Mobil Corp, Pfizer Inc and
Raytheon Technologies Corp being removed. Each of the
new components was lower on the session.

The Dow Jones Industrial Average fell 207.97 points,
or 0.73%, to 28,445.9, the S&P 500 gained 0.27 points, or
0.01%, to 3,508.28, and the Nasdaq Composite added
117.00 points, or 1%, to 11,812.63.

The dollar edged lower against a basket of major currencies
and was set for a fourth straight monthly decline.

In Europe, stocks closed lower on the day as financial
shares were weighed down by soft inflation data in Germany and
Italy, but managed to close higher for the month. Trading in
London was closed for a public holiday.

MSCI's world equity index, which has risen
more than 6% in August, is set for a fifth month of gains as
massive monetary and fiscal stimulus outweighs concern about the
outlook for a world economy battered by the coronavirus. The
index hit a record on Monday before reversing course on the day.

The pan-European STOXX 600 index lost 0.62% and
MSCI's gauge of stocks across the globe shed
0.14%.

The expectations for the Fed to keep interest rates lower
for an extended period again kept the dollar in check, with a
fourth straight month of declines marking its longest streak
since 2017. The greenback, as measured against a basket of six
other major currencies, hit a low of 91.989, its lowest level
since May 1, 2018.

The dollar index fell 0.129%, with the euro up
0.34% to $1.1943.

Treasuries benchmark 10-year notes last rose
11/32 in price to yield 0.6933%, from 0.729% late on Friday.

Oil prices gave up earlier gains. Brent crude oil dipped
from a five-month high, as global demand struggled to regain
levels prior to the coronavirus pandemic.

U.S. crude recently fell 0.49% to $42.76 per barrel
and Brent was at $45.57, down 0.52% on the day.

(Reporting by Chuck Mikolajczak; Additional reporting by Medha
Singh in Bengaluru; Editing by Lisa Shumaker and Leslie Adler)

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