GLOBAL MARKETS-Stocks drop as trade dims earnings outlook; Mexican peso tumbles

* BASF cites trade tensions as hindrance to profits
* Mexican peso tumbles after finance minister resigns
* GRAPHIC-Asian stock markets: https://tmsnrt.rs/2zpUAr4
* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh

(Updates to close of U.S. markets)
By April Joyner
NEW YORK, July 9 (Reuters) - A gauge of stock markets around
the world fell on Tuesday as trade tensions weighed on the
outlook for corporate earnings, while Mexico's peso tumbled
after the country's finance minister resigned.
European and U.S. stocks dropped early after German
chemicals giant BASF BASFn.DE warned of a 30% fall in its
adjusted annual profit, citing trade friction and a global
slowdown in growth. On Wall Street, an analyst downgrade of 3M Co MMM.N
contributed to a drop in the Dow Jones Industrial Average
.DJI . However, the benchmark S&P 500 index .SPX edged higher
and the Nasdaq .IXIC posted gains as the tech-related FAANG
stocks rose.
Even so, MSCI's gauge of stocks across the globe
.MIWD00000PUS shed 0.10%.
The Mexican peso MXN= slid as much as 2.25% against the
dollar after Finance Minister Carlos Urzua resigned, citing deep
differences over economic issues. It was last down 1.2%.
Some encouraging news on trade came as the United States and
China were set to relaunch talks this week after a two-month
hiatus. White House economic adviser Larry Kudlow said talks
with the European Union to move forward on a trade agreement
were also in progress. However, skepticism remained among market participants on
how much progress the United States and China have made toward
resolving their differences.
"A resolution to the trade war is far off," said Oliver
Pursche, chief market strategist at Bruderman Asset Management
in New York. "I wouldn't be surprised if it went into 2020."
The Dow Jones Industrial Average .DJI fell 22.65 points,
or 0.08%, to 26,783.49, the S&P 500 .SPX gained 3.68 points,
or 0.12%, to 2,979.63 and the Nasdaq Composite .IXIC added
43.35 points, or 0.54%, to 8,141.73.
Benchmark 10-year notes US10YT=RR last fell 8/32 in price
to yield 2.0613%, from 2.034% late on Monday. The potential reaction to monetary policy at the world's top
central banks also remained in focus ahead of Federal Reserve
Chairman Jerome Powell's testimony before the U.S. Congress on
Wednesday and Thursday.
Money market futures 0#FF: are still fully pricing in a
25-basis-point cut at the Fed's July 30-31 meeting, but have
almost priced out a larger half-percentage-point move that had
been seen as a real possibility just a couple of weeks ago.
"There may be some clarity coming out in the next couple of
days based on what Powell says at these hearings," said Bucky
Hellwig, senior vice president at BB&T Wealth Management.
In currency markets, Britain's sterling GBP= dropped to a
six-month low and was last 0.4% lower against the dollar at
$1.2462 amid a worsening economic outlook and rising fears about
a no-deal exit for Britain from the European Union. The dollar index .DXY , which measures the greenback
against a basket of six major currencies, rose 0.13%, while the
euro dipped 0.1% to $1.1206 EUR= .
Oil prices firmed as OPEC supply cuts and Middle East
tensions outweighed the U.S.-China trade dispute that has been
dragging down the global economy and oil demand.
Brent crude futures LCOc1 settled up 5 cents to $64.16.
U.S. West Texas Intermediate crude CLc1 settled up 17 cents to
$57.83. Spot gold XAU= ticked 0.1% higher to $1,397.06 an ounce.
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GRAPHIC-Dot plot, Fed funds futures July 9 https://tmsnrt.rs/2YLmEzm
GRAPHIC-Euro zone government debt falls further into negative
yielding territory https://tmsnrt.rs/2YFiJUF
GRAPHIC-U.S. government debt yield curve https://tmsnrt.rs/2YHFE1M
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