GLOBAL MARKETS-G20 nerves hit Europe stocks; dollar slips to three-month low

* Europe stocks slip, U.S. futures point to stronger open
* German business sentiment lowest since 2014
* Investors doubtful over meaningful U.S.-China deal at
summit
* U.S.-Iran tensions puts floor under oil prices
* Dollar index slips to three-month low
* Gold flirts with Fridays' six-year high

By Karin Strohecker
LONDON, June 24 (Reuters) - European stocks stumbled and the
dollar hit three-month lows on Monday as hopes waned for
progress in Sino-U.S. trade talks at this week's G20 meeting and
fears of an escalation in Iran tensions flared up.
Investors are waiting to see if Presidents Donald Trump and
Xi Jinping can de-escalate a trade war that is damaging the
global economy and souring business confidence. The leaders will
meet during a G20 summit in Japan. Pan-European STOXX 600 .STOXX fell 0.2%, reflecting
similar losses in Paris .FCHI . Stocks in London were little
changed .FTSE .
Germany's export-sensitive DAX index fell 0.6% after a
profit warning from Daimler sent the Mercedes-Benz maker's
shares some 4.2% lower. In addition, data showed that German
business morale in June fell to its lowest since November 2014,
adding weight to expectations that Europe's largest economy
shrank in the second quarter. Nonetheless, gains in Asia saw the MSCI regional as well as
the broader global stocks gauges rise again towards last week's
six-week highs hit last week. Wall Street also looked in line
for more gains after closing lower on Friday. S&P 500 e-minis
ESc1 pointed to a 0.2% rise at the open.
"G20 is turning into a high-stakes poker game for risk and
if the sideline talks between Trump and Xi fail and trigger an
escalation in tariffs, the odds of a full-blown global recession
increase exponentially," said Stephen Innes, managing partner at
Vanguard Markets.
On Monday, Chinese Vice Commerce Minister Wang Shouwen said
China and the U.S. should be willing to compromise in trade
talks and not insist only on what each side wants. U.S. Vice President Mike Pence's decision on Friday to call
off a planned China speech was also considered a positive sign.
Pence had upset China with a fierce speech in October that laid
out a litany of complaints ranging from state surveillance to
human-rights abuses.
Still, most analysts doubt the two sides will come to any
meaningful agreement. Tensions are reaching beyond tariffs,
particularly after Washington blacklisted Huawei HWT.UL , the
world's biggest telecoms gear maker, effectively banning U.S.
companies from doing business with it.
"Any high hopes ahead of the G20 meeting may be
disappointed," said Benjamin Schroeder, senior rates strategist
at ING in Amsterdam. "In the end uncertainty will persist and
central banks could still be pushed closer to invoking their
contingency plans."
The U.S. Commerce Department said on Friday it was adding
several Chinese companies and a government-owned institute
involved in supercomputing with military applications to its
national security "entity list" that bars them from buying U.S.
parts and components without government approval. A Chinese newspaper said FedEx Corp FDX.N was likely to be
added to Beijing's "unreliable entities list". U.S. markets had reached record highs after last week's
signals by the Federal Reserve that it may cut interest rates
soon to bolster the U.S. economy. .N
However, that weakened U.S. currency, causing a dollar index
to slip 0.1% lower to 96.11 after its biggest weekly drop in
four months last week.
The dollar has led a broad selloff in major currencies as
global central banks signalled a dovish outlook on monetary
policy amid growing signs of a weak global economy.
The dollar fetched 107.29 yen JPY= , having slipped to as
low as 107.045 on Friday, the lowest level since its flash crash
on Jan. 3.
"The market is not expecting more Fed rate cuts than it had
so far but that the reasoning behind them is being interpreted
in a different manner," Commerzbank's head of FX and Commodity
Research Ulrich Leuchtmann wrote in a note to clients.
"While for a long time the expected weakening of growth,
fears of a recession and low inflation were used as reasons for
rate cuts, another reason has now been added to the list: the
Fed caving in to the White House."
The euro rose to a three-month high of $1.1393 EUR=
against the dollar. FRX/
In developing markets, the Turkish lira strengthened as much
as 2% TRY= after Turkey's main opposition won a re-run
election in Istanbul for mayor on Sunday, a blow to President
Tayyip Erdogan.
Bitcoin BTC=BTSP pulled back from 15-month highs after
jumping more than 10% over the weekend. Analysts said the gains
came amid growing optimism over the adoption of cryptocurrencies
after Facebook announced its Libra digital coin. The glum German data pushed bond yields across the euro zone
lower, reinforcing ECB rate-cut expectations. Economic woes, looming U.S. interest rate cuts and flaring
tensions between Tehran and Washington drove safe-haven gold
higher. It stood at $1,407.9 per ounce XAU= , not far from
Friday's six-year high of $1,410.78.
The rising tensions between Iran and the United States,
after Iran shot down an American drone, also pushed oil prices
higher. U.S. Secretary of State Mike Pompeo -- who met with
Saudia Arabia's king and crown prince on Monday -- warned
"significant" sanctions on Tehran would be announced.
Brent crude futures stood at $65.16 per barrel LCOc1 , near
Friday's three-week high of $65.76. U.S. crude futures CLc1
were up 0.7% at $57.84, its highest in over three weeks. O/R


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