(Refiles to fix dropped letters in headline.)
* European stocks fall 1%, world shares set to end winning
streak
* A$ falls as Melbourne reintroduces some lockdown measures
* Commodities weaker overall, but copper at five-month high
* U.S. dollar regains traction in FX markets
By Herbert Lash
NEW YORK, July 7 (Reuters) - Investor caution over renewed
coronavirus lockdowns snuffed out a five-day rally in most world
equity markets on Tuesday and weighed on oil prices, though it
was not enough to halt a hot streak in Chinese stocks.
The dollar edged higher as risk currencies such as the
Australian dollar took a breather from recent gains and gold
dipped as investors booked profits after bullion rallied to a
near eight-year peak, trading around $1,780 an ounce.
Equity bourses in London .FTSE , Paris .FCHI and
Frankfurt .GDAXI fell 1% or more, while stocks fell far less
on Wall Street, with the Nasdaq trading flat to slightly higher.
U.S. Treasury yields ticked lower as a rising COVID-19
caseload raised concerns about economic reopening plans. The
greater Miami area in Florida became the latest U.S. coronavirus
hot spot to roll back its reopening. Cases surged nationwide by
the tens of thousands and the U.S. death toll topped 130,000.
Investors remain concerned about the U.S. economic outlook,
said Jim Barnes, director of fixed income for Bryn Mawr Trust in
the Philadelphia suburb of Berwyn.
"Economic conditions still have a long way to go to get back
to pre-crisis levels," he said.
MSCI's all-country world index .MIWD00000PUS , which tracks
shares in 49 nations, fell 1.64 points, or 0.3%, while Europe's
broad FTSEurofirst 300 index .FTEU3 dropped 0.64%.
On Wall Street, the Dow Jones Industrial Average .DJI fell
165.47 points, or 0.63%, to 26,121.56 and the S&P 500 .SPX
lost 1.98 points, or 0.06%, to 3,177.74. But the Nasdaq
Composite .IXIC added 52.18 points, or 0.5%, to 10,485.83. The
Nasdaq set a fresh intraday peak.
Lockdown measures were also reimposed in Melbourne,
Australia, confining its nearly 5 million residents to all but
essential travel for another six weeks.
"Just when many parts of the world looked to have got to
grips with the coronavirus pandemic, many jurisdictions
re-imposed lockdowns to contain a surge in new cases," said Luca
Paolini, chief strategist at Pictet Asset Management.
Corporate earnings are expected to fall by about 20% percent
this year following the deepest recession in more than a
century. Pictet expects a 30% to 40% slump.
"But that does not mean equity and corporate bond markets
are due a sharp fall," Paolini said, predicting the U.S. Federal
Reserve will inject a further $1.3 trillion of stimulus this
year and the European Central Bank will add another 1.1 trillion
euros ($1.24 trillion).
The euro EUR= was last down 0.20% at $1.1285.
The euro zone economy will drop into a deeper recession this
year than previously expected and take longer to rebound, the
European Commission forecast. Expectations are for a record 8.7%
slump and 6.1% recovery in 2021. The commission had forecast in
May a 7.7% downturn and a 6.3% rebound in 2021.
The dollar index =USD , which tracks the greenback versus a
basket of six currencies, rose 0.22% to 96.942. The yen JPY=
was up 0.20% at $107.5700.
Analysts said signals from the Chinese government through a
state-sponsored journal on "fostering a healthy bull market",
published on Monday, had helped the buying binge in Chinese
shares. Copper prices soared to their highest in more than five
months due to strong demand prospects in top consumer China and
worries about supplies from Chile, the world's largest producer
of the red metal.
Shanghai's blue-chip index was sputtering by the close after
adding to its 15% gains over the past week. .SS
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