GLOBAL MARKETS-Oil climbs on Iran tensions, stocks edge back from 7-week highs

* Gold at near six-year highs after big week
* Investors digest possible wave of central bank easing
* U.S.-China trade talks in focus at G20 meeting
* Dollar hits three-month lows on U.S. rate cut bets

(Updates with close of U.S. markets)
By Lewis Krauskopf
NEW YORK, June 21 (Reuters) - Oil prices added to recent
gains on Friday on fears any U.S. military attack on Iran would
disrupt flows of crude from the Middle East, while a gauge of
global stock markets edged back from seven-week highs following
a run-up spurred by optimism over monetary policy.
Gold prices rose to near six-year highs. The dollar fell to
a three-month low against a basket of currencies.
Central banks have dominated economic news this week, with
the Federal Reserve signaling the potential for a U.S. interest
rate cut later this year and the European Central Bank hinting
at stimulus measures. MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.10%, after a day earlier reaching its highest since May 1.
U.S.-China trade tensions were also in focus ahead of an
expected meeting between the countries' two leaders next week at
a G20 meeting in Osaka, Japan. U.S. stocks were supported by news that U.S. Vice President
Mike Pence called off a planned China speech that had been
initially cast as a sequel to a blistering broadside he
delivered in October, a move aimed at averting increasing
tensions with Beijing.
“Having an accommodative interest rate outlook is a positive
for the markets, but now investors are looking for direction on
trade,” said Christopher O'Keefe, portfolio manager at Logan
Capital Management in Ardmore, Pennsylvania.
"For the market to meaningfully move forward from here you
have to have some positive outcome on trade."
On Wall Street, the Dow Jones Industrial Average .DJI fell
33.84 points, or 0.13%, to 26,719.33, the S&P 500 .SPX lost
3.68 points, or 0.12%, to 2,950.5 and the Nasdaq Composite
.IXIC dropped 19.63 points, or 0.24%, to 8,031.71.
The pan-European STOXX 600 index .STOXX lost 0.36%.
Trump said he had aborted a military strike on Iran because
such a response to Tehran's downing of an unmanned U.S.
surveillance drone would have caused a disproportionate loss of
life. Spot gold XAU= added 0.8% to $1,399.05 an ounce,
surpassing the $1,400 level during the session. "There is a perfect mix of ingredients for gold's rush to
the top - a weak macroeconomic environment, low bond yields,
soft dollar and rising geopolitical tensions," said Howie Lee,
an economist at OCBC Bank.
Oil futures rallied on fears of disruption to flows in the
Middle East, which provides more than a fifth of the world's oil
output.
U.S. crude CLcv1 settled up 0.6% at $57.43 a barrel, and
Brent LCOcv1 settled at $65.20, up 1.2%. Government bond yields in the United States and Europe rose
but remained near record or multi-year lows after the dovish
statements from the central banks. Benchmark 10-year U.S. Treasury notes US10YT=RR last fell
17/32 in price to yield 2.0591%, from 2.001% late on Thursday.
The dollar index .DXY , which measures the greenback
against a basket of currencies, fell 0.44%, falling to a
three-month low, with the euro EUR= up 0.66% to $1.1366.
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Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
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