GLOBAL MARKETS-Stocks fall as markets still rattled by Fed minutes

* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog: LIVE/

By Elizabeth Howcroft
LONDON, Aug 20 (Reuters) - Asian and European share markets
fell on Thursday, after the U.S. Federal Reserve's latest
meeting minutes highlighted doubts about the recovery of the
world's largest economy and knocked Wall Street from recent
record highs.
MSCI's broadest index of Asia-Pacific shares outside Japan
had its biggest daily decline in five weeks .MIAPJ0000PUS
while the MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was down 0.6% at 0738 GMT.
The pan-European STOXX 600 was down 0.9% .STOXX and
London's FTSE 100 fell 0.8% .FTSE . The Fed's minutes from its July meeting, which were released
on Wednesday, highlighted doubts about the U.S. economic
recovery, showing that the swift labour market rebound seen in
May and June had likely slowed. Several Fed policymakers said they may need to ease monetary
policy to help get the economy through the coronavirus pandemic.
"Of course, the Fed agreed that the virus is weighing
heavily on the economy: is that some kind of surprise?
Apparently it was," Rabobank's global strategist Michael Every
wrote in a note to clients.
Despite the dovish minutes, U.S. Treasury yields and the
dollar rose with investors focusing on parts of the minutes that
showed policymakers downplaying the need for yield caps and
targets.
The dollar index, which measures the currency against a
basket of major peers, was choppy overnight =USD .
"The key question for investors is whether the policy
responses are enough to mitigate the economic damage," hedge
fund firm Brevan Howard said in an interim report published on
Thursday.
"Many businesses face solvency risks that are not addressed
by borrowing; a debt overhang cannot be cured by more borrowing
no matter how cheap it may be," the fund's report added.
"Improved financial conditions are narrowly focused on a
handful of large companies and benefiting stakeholders who need
relatively little economic assistance. The result is that
financial assets are expensive by many standard metrics.
"So long as a V-shaped recovery in risky assets fails to
create a V-shaped recovery in economic activity, this tension is
a recipe for increased volatility."
Spot gold rebounded overnight, after declining to a near
one-week low on Wednesday, when markets were more bullish.
It was up 0.6% at 0748 GMT, at $1,940.4478 per ounce XAU= .
Oil prices fell, as major producers warned of a risk to
demand recovery. OPEC and its allies pressed oil nations that are pumping
above output targets to cut more in August to September.
Brent crude LCOc1 was down 32 cents, or 0.7%, at $45.05 a
barrel while U.S. oil CLc1 was down 38 cents, or 0.9%, at
$42.55 a barrel.
It will take at least two years for the euro zone to fully
recover from its deepest recession on record, according to a
Reuters poll of economists. Minutes from the European Central Bank's July meeting are
due at 1130 GMT.
Germany's benchmark 10-year Bund yield was at -0.473%,
little changed after falling for the past four days in a row
DE10YT=RR .
Markets also remained cautious about acrimonious U.S.-China
relations.
China's commerce ministry said the two countries have agreed
to hold trade talks "in the coming days" to evaluate their Phase
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