(New throughout, updates prices, market activity and comments
to U.S. close)
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* U.S. to no longer recognize Hong Kong as autonomous
* U.S. stocks reverse loses
* MSCI All Country World Index down 0.2%
By John McCrank and Herbert Lash
NEW YORK, May 29 (Reuters) - A gauge of global equities
rebounded and crude oil rose on Friday after U.S. President
Donald Trump ordered an end to Washington's special treatment of
Hong Kong, a move investors welcomed as unlikely to jeopardize a
trade accord with China.
Trump said China broke its word over Hong Kong's autonomy
but did not mention any action that would undermine the Phase 1
trade deal that Washington and Beijing signed this year.
China's parliament on Thursday passed new national security
legislation for the city, casting doubt on its freedoms and its
future as a finance hub.
U.S. stocks pared losses after Trump's remarks and oil
gained on hopes the dispute will not curb the economy's nascent
recovery from the coronavirus pandemic.
The Dow Jones Industrial Average fell 17.53 points,
or 0.07%, to 25,383.11, the S&P 500 gained 14.58 points,
or 0.48%, to 3,044.31 and the Nasdaq Composite added
120.88 points, or 1.29%, to 9,489.87.
Investors were worried about a further deterioration in
Sino-U.S. relations, which have soured considerably through the
COVID-19 pandemic.
"The market was worried he was going to announce something
substantial, something detrimental to the U.S. economy. Then as
he spoke it became clear the actions being taken were not going
to be as dramatic as originally feared," said Chris Zaccarelli,
chief investment officer at Independent Advisor Alliance in
Charlotte, North Carolina.
MSCI's gauge of stocks across the globe
gained 0.05%. In Europe, the pan-regional STOXX 600 index
lost 1.44%.
Overnight in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan fell 0.2%. Japan's Nikkei
retreated from a three-month high and the yen rose to a
two-week high of 107.06 against the dollar, while bonds rose.
The Chinese yuan weakened in offshore trade.
Hong Kong's Hang Seng index declined 0.8% and has
lost about 3% in the two weeks since news of China's security
legislation broke.
The yield on benchmark 10-year U.S. Treasury notes
fell 0.651 basis points to 0.6526%.
Federal Reserve Chair Jerome Powell on Friday reiterated the
U.S. central bank's promise to use its tools to mitigate
economic fallout from the pandemic, even investors were turning
their attention to the next phase of its response.
MAY RALLY
Massive amounts of government stimulus helped lift global
stocks in May, offsetting reams of grim economic data.
Equity markets have had difficulty gauging the pandemic's
impact on earnings. But data on Friday showed a record drop in
U.S. consumer spending for the second straight month and the
highest-ever saving rate, reflecting high levels of economic
uncertainty.
Investors have been buying stocks as lockdowns have been
lifted or eased, betting on a speedy recovery.
The S&P 500 gained around 4% for the month, making it
the best May since 2009.
MSCI's All Country World Index, which tracks
stocks across 49 countries, was up around 3.5% this week - its
best weekly performance since April.
The euro climbed above its 200-day moving average for
the first time since late March as the European Union's 750
billion-euro coronavirus recovery fund fueled optimism.
It was up 1.3% month-to-date against the greenback, last trading
at $1.1097.
The dollar index fell 0.178%against a basket of
currencies.
U.S. gold futures settled up 1.4% at $1,751.70 an
ounce.
U.S. crude oil prices jumped more than 5%, while Brent, the
international benchmark, edged higher. U.S. crude futures
rose $1.78 to settle at $35.49 a barrel, while Brent
settled up 4 cents at $35.33 a barrel.
Both contracts had their biggest monthly gains in years,
supported by production cuts and optimism about demand recovery
led by China.
(Reporting by John McCrank and Herbert Lash; Editing by Dan
Grebler, Nick Zieminski and David Gregorio)