GLOBAL MARKETS-Oil, shares fall on potential limit on China investments

* MSCI's world equity index flat after erasing losses
* Trump impeachment talk adds to geopolitical risk
* U.S.-China trade optimism boosts Europe
* But investors see major deal in October unlikely
* Dollar flat, euro at more than 2-year lows
* Wall Street futures up 0.3%
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Herbert Lash
NEW YORK, Sept 27 (Reuters) - Crude oil prices and a gauge
of global equity markets fell on Friday after a report said the
administration of U.S. President Donald Trump was weighing
limits on the flow of U.S. portfolio investments into China.
White House officials are discussing ways to limit U.S.
portfolio flows into China, Bloomberg reported, citing people
familiar with the internal deliberations. Trump officials are also considering delisting Chinese
companies from U.S. stock exchanges, a Bloomberg reporter said
separately in a tweet.
A gauge of world equity markets had rebounded earlier,
buoyed by optimism U.S.-China trade tensions might be easing as
markets largely brushed off concerns about impeachment moves
against Trump.
MSCI's world equity index .MIWD00000PUS , which tracks
shares in 47 countries, fell 0.2%, heading toward its worst
weekly performance since mid-August.
Major equity indexes in Europe closed higher even as data
showed slowing growth around the world. U.S. data showed consumer spending barely rose in August and
business investment remained weak, suggesting the American
economy was losing momentum as trade tensions linger.
Still, the Commerce Department reports likely do not signal
a recession is looming as consumer spending remains supported by
solid income growth thanks to the lowest unemployment rate in
nearly 50 years and massive savings.
"The market is in a holding pattern for a bunch of different
reasons; one is the data has gotten better but it's still very
much mixed," said Joseph LaVorgna, chief economist for the
Americas at Natixis in New York.
"There's no catalyst to push equities meaningfully higher or
lower, so we're going to wait and see what the next surprise is.
Either it's data or something on the political front," he said.
A strong rally in mining shares propped up European shares,
but they ended the week lower for the first time in five weeks
as concerns about economic growth and trade, as well as
political worries, kept a lid on gains. The pan-European STOXX 600 index .STOXX closed up 0.47%
and the FTSEurofirst 300 index .FTEU3 of leading regional
shares gained 0.41%.
On Wall Street, the Dow Jones Industrial Average .DJI rose
6.82 points, or 0.03%, to 26,897.94. The S&P 500 .SPX lost
5.68 points, or 0.19%, to 2,971.94 and the Nasdaq Composite
.IXIC dropped 37.25 points, or 0.46%, to 7,993.42.
Earlier in the day, Asia-Pacific shares outside Japan
.MIAPJ0000PUS were buffeted by the political worries in the
United States and shed 0.3%.
Oil prices headed for a weekly loss on a
faster-than-expected recovery in Saudi output, while investors
also worried about global crude demand amid slowing Chinese
economic growth.
In a volatile session, Brent crude LCOc1 futures lost 79
cents to $61.95 a barrel.
U.S. West Texas Intermediate (WTI) crude CLc1 futures rose
28 cents to $56.13 a barrel.
In China, the world's second-largest economy and biggest
importer of crude oil, industrial companies reported a
contraction in profits in August.
"If the global economy weakens, for which there are already
some signs, we may lower oil demand expectations," IEA Executive
Director Fatih Birol told Reuters.
Bond yields in France and Spain were set for their biggest
weekly decline in six weeks, while a key market gauge of
long-term inflation expectations slid back toward record lows in
a sign of growing concern about weak growth and inflation.
A key market gauge of the euro zone's inflation expectations
fell to its lowest level since early July at 1.188%
EUIL5YF5Y=R , heading back toward record lows hit in June.
French and Spanish 10-year bond yields were down 6-9 basis
points this week, their biggest weekly decline in six weeks
ES10YT=RR FR10YT=RR .
U.S. Treasury prices traded little changed after U.S. data
was weaker than expected and as month- and quarter-end
rebalancing increased demand for safe-haven U.S. debt.
Benchmark 10-year notes US10YT=RR fell 2/32 in price to
yield 1.6913%.