GLOBAL MARKETS-Stocks falter, dollar slips on potential U.S.-China trade delay

* S&P 500 hits intraday record, but closes lower
* Poor earnings cloud European equities
* Dollar slips on potential delay in U.S.-China trade deal
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Herbert Lash
NEW YORK, Oct 29 (Reuters) - Global stocks faltered on
Tuesday as strong earnings from U.S. drugmakers Merck and Pfizer
and expectations the Federal Reserve will cut rates was offset
by a potential delay in a U.S.-China trade deal, which clouded
sentiment and weakened the dollar.
European shares fell as companies headed toward their worst
quarterly earnings in more than three years, according to the
latest estimates by Refinitiv, underscoring concerns about the
deteriorating health of Europe Inc.
The U.S. S&P 500 index eked out a fresh record intraday
high, led by Merck and Pfizer, though a disappointing profit
report from Google parent Alphabet kept the technology-rich
Nasdaq in the red.
The benchmark index had breached its all-time high set in
July on Monday, spurred by hopes of a U.S.-China trade deal and
the likelihood of further stimulus from the U.S. central bank on
Wednesday when it concludes a two-day meeting of policy-makers.
The steepening of the two- and 10-year yield curve suggests
a budding risk-on sentiment among investors, now that some form
of a U.S.-China trade agreement is likely, said Yousef Abbasi,
global market strategist at INTL FCStone Financial in New York.
The spread in the yield curve US2US10=TWEB has gained
about 20 basis points since leaving negative territory, a
recession indicator, in early September.
However, a U.S. administration official said on Tuesday that
an interim trade agreement might not be completed in time for
signing in Chile next month as expected, while adding that did
not mean the accord is falling apart. Technology .SPLRCT shares, a sector of the S&P 500 that
has been closely tied to trade progress, fell 0.92%.
Drugmakers Merck & Co Inc MRK.N and Pfizer Inc PFE.N
rose after reporting upbeat third-quarter results, gaining 3.5%
and 2.5%, respectively. The healthcare sector .SPXHC , which
has been the second-worst performer among the 11 major S&P 500
sectors this year, rose 1.16% as the session's best performer.
A rotation into value stocks that investors have posited for
months seems be taking hold, Abbasi said, pointing to recent
gains in the SPDR S&P Regional Banking ETF KRE as evidence.
The ETF has traded below 56 since May and could be set for
further upside after a recent rally from below 50, he said.
"We're seeing some of those high-flying tech names
struggle," Abbasi said. "We're getting that risk-on move from
sectors that have been ignored all year, the sectors that
haven't been loved."
Apple AAPL.O and Microsoft MSFT.O fell, as did
Amazon.com AMZN.O .
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.05%, while the pan-European STOXX 600 index .STOXX
lost 0.16%. MSCI's emerging markets index .MSCIEF rose 0.07%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
19.26 points, or 0.07%, to 27,071.46. The S&P 500 .SPX lost
2.53 points, or 0.08%, to 3,036.89 and the Nasdaq Composite
.IXIC dropped 49.14 points, or 0.59%, to 8,276.85.
Oil pared losses amid expectations that U.S. refined product
stockpiles declined last week.
Brent crude LCOc1 rose 2 cents to settle at $61.59 a
barrel, while U.S. West Texas Intermediate CLc1 crude settled
down 27 cents to $55.54.
Britain's FTSE 100 .FTSE fell 0.34% as uncertainty over a
looming general election compounded a 4.0% drop in shares of BP
BP.L after the oil major posted a sharp drop in third quarter
profit. The losses in Europe followed a mixed performance in Asia,
where Japan's Nikkei .N225 rose 0.4% to reach levels last seen
a year ago. Shanghai blue chips .CSI300 dithered either side
of flat.
Benchmark 10-year U.S. notes US10YT=RR rose 4/32 in price
to yield 1.8367%.
The dollar index .DXY fell 0.09%, with the euro EUR= up
0.13% to $1.1112. The Japanese yen JPY= strengthened 0.10%
versus the greenback at 108.86 per dollar.

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