GLOBAL MARKETS-Dollar gains, stocks ebb after jobs data halts rally

* Stimulus worries weigh on Wall Street as talks drag
* Gold tumbles 2% as dollar surges, euro falls
* Oil falls on fears coronavirus to sap fuel demand

By Herbert Lash
NEW YORK, Aug 7 (Reuters) - The dollar bounced off two-year
lows and a gauge of global equity markets halted its march
toward a record high on Friday, as better-than-expected U.S.
jobs growth in July was tempered by the wrangles in Washington
over a new stimulus bill.
Big rallies in gold and the euro were also snapped.
The U.S. Labor Department's data showed slowing employment
growth in July amid a surge in COVID-19 cases, highlighting the
need for the White House and Congress to agree on an aid
package.
Gold slid 2%, after hitting a record high earlier in the
week, the euro fell from highs against the dollar last seen in
May 2018 and U.S. Treasury yields rose, halting a downward move
that had the benchmark 10-year note poised to fall below 0.5%.
The sell-off was due to profit-taking after the record peaks
this week in gold and the tech-driven Nasdaq, and as the value
of the dollar ebbed, said Axel Merk, president and chief
investment officer of Merk Investments LLC in San Francisco.
"We've had such a dramatic move. It's been dollar-centric,
call it a profit-taking reversal. I don't think there is a
change in environment," said Merk.
European equities eked out modest gains, with the
pan-regional FTSEurofirst 300 index .FTEU3 adding 0.27%. But
the euro's sharpest sell-off since April helped Germany's
export-heavy DAX index .GDAXI to close up 0.66%.
Stocks on Wall Street meandered, with the S&P 500 and Dow in
negative territory most of the session before turning positive
at the close.
The Dow Jones Industrial Average .DJI rose 0.17%, the S&P
500 .SPX gained 0.06% and the Nasdaq Composite .IXIC dropped
0.87%. The declines snapped the Nasdaq's seven-session streak of
gains.
MSCI's benchmark for global equity markets .MIWD00000PUS
fell 0.36% to 563.11. The index for stock performance in 49
countries rose 0.7% for the week and is about 3% away from its
record peak set in February.
The dollar index =USD rose 0.648%, with the euro EUR=
down 0.77% to $1.1783. The Japanese yen JPY= weakened 0.41%
versus the greenback at 105.97 per dollar.
The U.S. labor market report defied the market's downside
fears with solid job gains in July, allowing the dollar to rally
into the weekend and the markets to breath a sigh of relief,
said a report from Action Economics.
Financial markets remain focused on the potential passage of
another stimulus bill in Congress, but the White House and
Democrats appear far apart after nearly two weeks of talks that
have failed to produce substantial progress.
Democrats in Congress said on Friday they offered to reduce
their proposed coronavirus aid package by a trillion dollars if
Republicans would add a trillion to their counter-offer, but the
idea was flatly rejected by the White House. Also weighing on markets was President Donald Trump's
sweeping ban, unveiled late Thursday, on U.S. transactions with
the Chinese owners of messaging app WeChat and video-sharing app
TikTok.
In response, China said the companies complied with U.S.
laws and warned Washington would have to "bear the consequences"
of its action. Chinese stocks led losers in Asia and the yuan slumped after
Trump issued executive orders to purge "untrusted" Chinese apps
TikTok and WeChat from U.S. digital networks.
Hong Kong's Hang Seng .HSI fell 1.6%. Tencent 0700.HK ,
Asia's second-biggest company by market capitalization and the
owner of WeChat, dropped as much as 10.1% and closed down 5.0%.
Mainland China's CSI 300 Index .CSI300 fell 1.15% despite
strong export data, while Japan's Nikkei .N225 slipped 0.4%.
The latest Bank of America fund flow statistics also
confirmed the undercurrent of caution in global markets, with
investors flocking to cash, gold and investment-grade bonds and
switching out of equities. Gold XAU= hit a record high of $2,072.5 an ounce overnight
in Asia, before succumbing to profit-taking.
Spot gold prices XAU= fell -1.59% to $2,030.34 an ounce.
U.S. gold futures GCv1 settled down 2% at $2,028.
Silver dropped 2.9% to $28.09 an ounce XAG= after rising
to a seven-year high of $29.838 on Thursday.
Oil prices fell nearly 2%, limiting their weekly gain due to
concerns the global recovery could falter from a surge in
coronavirus cases. The rise in infections remains the dominant
issue for the fuel demand outlook.
Brent crude futures LCOc1 slid 69 cents to settle at
$44.40 a barrel, while U.S. crude futures CLc1 settled down 73
cents at $41.22 a barrel.

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