GLOBAL MARKETS-Stocks fall as investors focus on U.S. stimulus

* Global stocks tick down on U.S. stimulus uncertainty
* Wall Street futures point to 0.2% loss
* European stocks down 0.9%
* U.S. Treasury yields climb to four-month high, then fall
* Chinese yuan climbs, up 4.5% this year
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Tom Wilson
LONDON, Oct 21 (Reuters) - Stocks fell and bonds staunched a
sell-off on Wednesday as investors looked for an agreement on a
U.S. coronavirus stimulus package, while the dollar fell to its
lowest in six weeks.
The MSCI world equity index .MIWD00000PUS , which follows
shares in nearly 50 countries, was flat, its earlier
Asia-powered gains eroded when European shares turned negative
in early trading and fell further through the morning.
The Euro STOXX 600 .STOXX was last down 0.9%, led lower by
healthcare .SXDP and real estate .SX86P shares. Indexes in
Paris .FCHI and Frankfurt .GDAXI were down 1% and 0.9%
respectively. Gains for sterling put pressure on London shares
.FTSE .
Wall Street stock futures EScv1 fell in volatile trading,
and were down 0.2%. The skittish mood reflected uncertainty over the prospects
of a U.S. fiscal stimulus package intended to bolster a recovery
from the economic damage caused by the coronavirus.
Earlier, Asia-Pacific shares outside Japan .MIAPJ0000PUS
gained 0.4%. Investors were betting on riskier assets as the
White House and Democrats in the U.S. Congress moved closer to
agreement on the stimulus package.
President Donald Trump said he was willing to accept a $2.2
trillion aid bill despite opposition from his own Republican
Party. But investors were nervous over whether any
such package would pass the Republican-controlled Senate.
A senior Republican aide told Reuters that Senate Majority
Leader Mitch McConnell has privately told his fellow Republicans
he did not favour a deal before the Nov. 3 elections.
"Everyone knows that more stimulus needs to come through,"
said Hugh Gimber, global market strategist at J.P. Morgan Asset
Management. "I'm not overly optimistic on prospects for more
stimulus before the election."
Bets on the stimulus also played out in government bonds
markets. U.S. Treasury yields rose to a four-month high in Asian
trading, with the yield curve steepening, then dropped.
Investors also sold benchmark euro zone debt, with German
Bund yields DE10YT=RR rising to their highest for a week
before falling again.
Deutsche Bank analysts wrote that a stimulus package is
increasingly priced in, either by the time of the election or by
early next year.

DOLLAR DOWN, YUAN UP
The dollar fell to a six-week low against a basket of
currencies =USD as hopes for a pre-election stimulus package
led traders to buy riskier currencies. It was last down 0.3% at
92.809, amid the doubts any package could pass the Senate.
The Chinese yuan reached a more than-two year high on firmer
central bank guidance and recent data showing a sustained
recovery in the world's second-largest economy.
The yuan CNY= was up 0.3% at 6.6552, taking gains against
the dollar this year to around 4.5%. Its rise helped lift the
Australian dollar AUD= , weighed down by expectations of a rate
cut in November, from Tuesday's three-week low.
Elsewhere, sterling rose to a one-week high against the U.S.
dollar on Wednesday after the European Union's Brexit negotiator
Michel Barnier said a new trade deal with Britain was "within
reach". The pound GBP=D3 rose 0.8% to $1.3050, its highest since
Oct. 14. The British currency also rose against the euro by 0.6%
to 90.80 pence EURGBP=D3 on the comments.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/

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