GLOBAL MARKETS-G20 nerves hit European stocks, dollar; oil gains

* Europe stocks slip, Asia ekes out gains before G20
* Investors doubtful over meaningful U.S.-China deal at
summit
* Oil rises on U.S.-Iran tensions
* Dollar index slips to fresh three-month low
* Gold flirts with Friday's six-year high

By Karin Strohecker
LONDON, June 24 (Reuters) - European stocks stumbled and the
dollar dropped to three-month lows on Monday as hopes waned for
progress in Sino-U.S. trade talks at this week's G20 meeting and
fears grew of a confrontation with Iran.
Investors are waiting to see if Presidents Donald Trump and
Xi Jinping can de-escalate a trade war that is damaging the
global economy and souring business confidence. The leaders will
meet during a G20 summit in Japan. Pan-European STOXX 600 .STOXX fell 0.2% , reflecting
losses in Paris .FCHI and Milan .FTMIB . Stocks in London
were little changed .FTSE . Germany's export-sensitive DAX fell
0.5% after a profit warning by Daimler caused its shares to
drop nearly 5%. However, gains in Asia saw the MSCI regional and global
stocks gauges rise again towards last week's six-week highs.
Wall Street also looked in line for more gains after closing
lower on Friday. S&P 500 e-minis ESc1 pointed to a 0.2% rise
at the open.
"G20 is turning into a high-stakes poker game for risk, and
if the sideline talks between Trump and Xi fail and trigger an
escalation in tariffs, the odds of a full-blown global recession
increase exponentially," said Stephen Innes, managing partner at
Vanguard Markets.
On Monday, Chinese Vice Commerce Minister Wang Shouwen said
China and the United States should be willing to compromise in
trade talks and not insist only on what each side wants.
U.S. Vice President Mike Pence's decision on Friday to call
off a planned China speech was also considered a positive sign.
Pence had upset China with a fierce speech in October that laid
out a litany of complaints ranging from state surveillance to
human-rights abuses.
Still, most analysts doubt the two sides will come to any
meaningful agreement. Tensions are reaching beyond tariffs,
particularly after Washington blacklisted Huawei HWT.UL , the
world's biggest telecoms gear maker, effectively banning U.S.
companies from doing business with it.
"Any high hopes ahead of the G20 meeting may be
disappointed," said Benjamin Schroeder, senior rates strategist
at ING in Amsterdam. "In the end, uncertainty will persist and
central banks could still be pushed closer to invoking their
contingency plans."
The U.S. Commerce Department said on Friday it was adding
several Chinese companies and a government-owned institute
involved in supercomputing to its national security "entity
list", which bars them from buying U.S. parts and components
without government approval. A Chinese newspaper said FedEx Corp FDX.N was likely to be
added to Beijing's "unreliable entities list". U.S. markets had reached record highs after last week's
signals by the Federal Reserve that it may cut interest rates
soon to bolster the U.S. economy. .N
However, that weakened U.S. currency, causing a dollar index
to slip 0.1% lower to 96.11 after its biggest weekly drop in
four months last week.
The dollar has led a broad selloff in major currencies as
global central banks signaled a dovish outlook on monetary
policy amid growing signs of a weak global economy.
The dollar fetched 107.39 yen JPY= , having slipped as low
as 107.045 on Friday, the lowest level since its flash crash on
Jan. 3.
"The market is not expecting more Fed rate cuts than it had
so far, but that the reasoning behind them is being interpreted
in a different manner," Commerzbank's head of FX and commodity
research, Ulrich Leuchtmann, wrote in a note to clients.
"While for a long time the expected weakening of growth,
fears of a recession and low inflation were used as reasons for
rate cuts, another reason has now been added to the list: the
Fed caving in to the White House."
The euro rose to a three-month high of $1.1387 EUR=
against the dollar. FRX/
In developing markets, the Turkish lira strengthened as much
as 2% TRY= after Turkey's main opposition party won Istanbul's
re-run election for mayor, a blow to President Tayyip Erdogan.

Bitcoin pulled back from 18-month highs after jumping more
than 10% over the weekend. Analysts said the gains came amid
growing optimism over the adoption of cryptocurrencies after
Facebook announced its Libra digital coin. Economic woes, looming U.S. interest rate cuts and tensions
between Tehran and Washington drove gold higher. The precious
metal stood at $1,404.79 per ounce XAU= , not far from Friday's
six-year high of $1,410.78.
The rising tensions between Iran and the United States,
after Iran shot down an American drone, also pushed oil prices
higher. U.S. Secretary of State Mike Pompeo said "significant"
sanctions on Tehran would be announced. Brent crude futures rose 0.4% to $65.42 per barrel LCOc1 ,
near Friday's three-week high of $65.76. U.S. crude futures
CLc1 were up 0.9% at $57.91, standing at its highest in over
three weeks. O/R


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