* European earnings are better-than-expected
* Markets eye escalating U.S.-China tensions
* Gold extends gains to new 9-year peak
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, July 23 (Reuters) - The dollar weakened and gold
rose further on Thursday as a gauge of global equities meandered
after earlier gains in Europe and Asia as rising cases of
COVID-19 crimped the U.S. labor market and deteriorating
U.S.-China relations gave investors pause.
The dollar hit four-month lows against a basket of peer
currencies and gold rose for a fifth straight session to hit a
fresh nine-year high as escalating tensions between the United
States and China increased bullion's safe-haven appeal.
Investors are selling the greenback on expectations the U.S.
economy will likely underperform its peers in the developed
world as the surge in new U.S. coronavirus infections pushed the
overall number of cases over 4 million.
"There has been a turn in dollar sentiment," said Marc
Chandler, chief market strategist at Bannockburn Forex in New
York.
The dollar index =USD fell 0.36% at $94.6590
Better-than-expected earnings in Europe lifted regional
shares, with Germany's Daimler AG DAIGn.DE forecasting a rise
in operating profit at its Mercedes-Benz division and Unilever 's
ULVR.L second-quarter sales falling far less than feared.
Europe's broad FTSEurofirst 300 index .FTEU3 closed up a
bare 0.08%.
Wall Street also struggled after four days of gains as
investors awaited a new U.S. coronavirus relief package and the
number of Americans seeking unemployment benefits unexpectedly
rose last week for the first time in nearly four months.
MSCI's benchmark for global equity markets .MIWD00000PUS
rose 0.15%, pulled lower by Wall Street.
The Dow Jones Industrial Average .DJI fell 0.31%, the S&P
500 .SPX gained 0.02% and the Nasdaq Composite .IXIC dropped
0.11%.
A further slide in U.S. Treasury yields, with the benchmark
10-year note staying below 0.6%, damped financial stocks.
"Financials are just going to have a tough time
participating if we stay this low, that being the second-largest
sector in the S&P 500, said JJ Kinahan, chief market strategist
at TD Ameritrade in Chicago.
"It's going t be hard to continue momentum," he said.
The 10-year Treasury US10YT=RR note fell 1.4 basis points
to 0.5807%.
Equities have rallied to their strongest since February,
with many country indices erasing their slump in March when the
coronavirus pandemic sent markets into freefall.
Oil edged lower as rising U.S. fuel inventories and concerns
about surging coronavirus cases outweighed the impact of a
weaker dollar, which usually boosts oil prices.
Brent crude futures LCOc1 fell $0.25 to $44.04 a barrel.
U.S. crude futures CLc1 slid $0.10 to $41.8 a barrel.
Spot gold prices XAU= rose 1.28% to $1,895.66 an ounce,
about $25 from their all-time peak in September 2011. GOL/
Investors have flocked to the safe-haven metal as they seek
shelter from a potential reversal in pumped-up stock prices and
a possible rise in inflation following so much monetary and
fiscal stimulus around the world.
In currency markets the euro was up 0.1% to $1.1583, close
to the 21-month high of $1.1601 EUR=EBS it touched on
Wednesday as agreement between European Union members on a large
economic recovery fund continued to provide lift.
Traders pleased with the deal have also pushed Italian
borrowing costs lower, and yields on 10-year government debt
dropped to a new 4-1/2 month low IT10YT=RR , moving closer to
1%.
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Spot gold price https://tmsnrt.rs/2ZQaU1m
The MSCI world equity index https://tmsnrt.rs/2CyOyca
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