GLOBAL MARKETS-World stocks pause rally on J&J news, USD bounces from 3-week low

(Updates prices)
By Koh Gui Qing
NEW YORK, Oct 13 (Reuters) - The U.S. dollar rose from a
three-week low on Tuesday while shares in Europe and the United
States eased, as news of a pause in Johnson & Johnson's COVID-19
vaccine trial led investors to take stock of recent rallies
before chasing further gains.
Some analysts said Tuesday's pullback in stock markets was
not indicative of a deeper aversion to risk, given that many
investors are convinced that there is more fiscal stimulus to
come in the United States.
Still, the dip in stock markets was accompanied by firmer
demand for traditional safe-haven assets such as the dollar and
government bonds. A stronger dollar in turn weighed on gold
prices.
Trade data from China released overnight that suggested the
world's second-largest economy was rebounding was mostly brushed
aside by stock and bond markets, though it boosted oil prices as
investors hoped for a slow recovery in energy demand.
The S&P 500 .SPX fell 23.5 points, or 0.65%, to 3,511.20,
but still within sight its record high of 3,580.84 struck on
Sept. 2. The Dow Jones Industrial Average .DJI dropped 139.8
points, or 0.48%, to 28,699.30. The Nasdaq Composite .IXIC
erased earlier gains to slip 36.3 points, or 0.3%, to 11,842.03
points.
Shares in Johnson & Johnson JNJ.N sagged 2.6% as investors
digested news that a participant in its COVID-19 vaccine trial
had fallen ill and that it would take the company at least a few
days to evaluate the situation. Investors see the quick introduction of a vaccine as key to
helping economies recover. J&J's news comes after its rival
AstraZeneca AZN.L , which uses a similar technology, paused the
trial of its experimental vaccine in September due to a
participant's unexplained illness.
"Markets have already priced in perfection," said Ken
Polcari, chief market strategist at SlateStone Wealth LLC in
Florida. "It's 'buy the rumor, sell the news.'"
European shares also struggled as investors found a reason
in news of Johnson & Johnson's delayed trial to take profits.
The Euro STOXX 600 .STOXX lost 0.77%, ending three
straight days of gains, with markets in Frankfurt .GDAXI ,
London .FTSE and Paris .FCHI mirroring its moves.
The sentiment in European and U.S. equities defied earlier
resilience in Asia, where Chinese shares got a lift from data
that showed exports rising 9.9% in September and imports
swinging to a 13.2% gain, versus a 2.1% drop in August.
The data suggested Chinese exporters were recovering from
the pandemic's damage to overseas orders and helped Chinese
blue-chip shares .CSI300 rise 0.33%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS , however,
trimmed earlier gains and was little changed by the end of
Tuesday.
The overall subdued mood in stock markets contrasted with
the dollar, which is on track for its best daily performance in
three weeks, as the dollar index =USD climbed 0.54% against a
basket of other currencies to 93.546. USD/
The Australian dollar, on the other hand, was slugged by
news that Beijing has stopped taking shipments of Australian
coal. The Aussie AUD=D4 dropped as much as 0.76% to $0.7152
AUD=D4 .
Government bond yields mostly fell as demand for safe-haven
bonds firmed.
The benchmark 10-year Treasury US10YT=RR yield retreated
to 0.7289%, a low not seen since Aug. 4. US/
Government bond yields in the euro zone also held near
recent troughs, with hefty supply failing to dent a market
bolstered by expectations for further central bank easing.
Germany's 10-year Bund yield touched -0.538% DE10YT=RR ,
its lowest in just over a week. Italian IT10YT=RR and Greek
GR10YT=RR benchmark 10-year debt both hit record lows.
A stronger dollar capped gold XAU= prices, which dropped
1.5% to $1,893.01 per ounce. GOL/
Benefiting from China's promising trade data, Brent crude
futures LCOc1 were up 73 cents, or 1.75%, to $42.45 a barrel.
U.S. West Texas Intermediate crude CLc1 futures rose 81 cents,
or 2.05%, to $40.24 a barrel.