GLOBAL MARKETS-Markets mixed with all eyes on U.S. stimulus talks

(Adds closing prices for U.S. stocks indexes)
* Dow Jones Industrial Average down 0.4%; S&P 500 down 0.2%
* European stocks fall for third successive session
* Gold hits one-week high, dollar at six-week low
* U.S. Treasury yields climb to four-month high
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Matt Scuffham
NEW YORK, Oct 21 (Reuters) - Global stocks sought direction
on Wednesday, while gold hit a one-week high and the dollar fell
to a six-week low as investors waited to see whether an
agreement could be reached on a fresh U.S. coronavirus relief
package.
The White House and congressional Democrats kept up
negotiations on a fresh coronavirus relief bill, though their
effort faced opposition in the Republican-controlled Senate,
where conservatives object to the trillion-dollar-plus price
tag. U.S. House Speaker Nancy Pelosi said there was still a
chance for a deal. But Senate Majority Leader Mitch McConnell
privately told his fellow Republicans he did not favor a deal
before the Nov. 3 presidential and congressional elections.
Some investors doubted whether a compromise could be
reached.
"I'm guessing that we will see stimulus but it won't be
until the first quarter," said Paul Nolte, portfolio manager at
Kingsview Investment Management.
Equities markets could pull back between 2% to 3% if no deal
is agreed, Nolte added.
The Dow Jones Industrial Average .DJI fell 0.4% to
28,210.82. The S&P 500 .SPX was 0.2% lower at 3,435.56, while
the Nasdaq Composite .IXIC fell 0.3% to 11,484.69.
European shares fell for a third straight session, as
concerns over the economic impact of new coronavirus
restrictions overshadowed encouraging earnings from consumer
giant Nestle NESN.S and telecoms equipment maker Ericsson
ERICb.ST .
The pan-European STOXX 600 .STOXX fell 1.3% to close at
its lowest in more than two weeks.
The STOXX 600 has struggled to break out of a trading range
since June, when it recouped a large part of the early
pandemic-driven losses. The benchmark is still about 16% below
its all-time high.
London's exporter-heavy FTSE 100 .FTSE underperformed,
marking its worst session in a month, hit by a surge in the
pound after bullish Brexit comments.
Gold, considered a hedge against inflation, currency
debasement and uncertainty, has gained more than 26% this year,
driven mainly by unprecedented levels of global stimulus to
cushion economies from the coronavirus-induced slump.
Spot gold XAU= jumped 1% to $1,924.73 per ounce, after
touching its highest since Oct. 12 at $1,931.01 in earlier
trade. U.S. gold futures GCv1 settled up 0.7% at $1,929.5.
Bets on the stimulus also played out in government bond
markets.
U.S. Treasury yields hit their highest levels in four months
on Wednesday on expectations a deal can be reached before
dropping back later in the day.
The market knows stimulus is coming one way or another,
whether before or after the election, which is helping push up
Treasury yields, Patrick Leary, chief market strategist at
Incapital in Minneapolis.
"This steepening that you're seeing is pricing in an
eventual stimulus package, it's also somewhat pricing in a
Democratic sweep in the election," he said.
The benchmark 10-year U.S. Treasury yield US10YT=RR rose
to 0.814%, up 6 basis points, having earlier touched fresh
four-month highs at 0.84%.
The dollar fell against a basket of currencies =USD as
hopes for a pre-election stimulus package led traders to buy
riskier currencies. It was last down 0.5% at 92.764.
Sterling rose to a one-week high against the dollar after
the European Union's Brexit negotiator Michel Barnier said a new
trade deal with Britain was "within reach". The pound GBP=D3 rose 1.7% to $1.3172, its highest since
Sept. 7. The British currency also rose against the euro by 0.6%
to 90.80 pence EURGBP=D3 on the comments.
Oil prices fell after a surprise build-up in U.S. crude
stockpiles stoked concerns about a global supply glut.
Brent crude futures LCOc1 for December delivery settled
at$41.73 a barrel, down $1.43, or 3.3%, while December U.S. West
Texas Intermediate (WTI) crude CLc1 futures settled at $40.03 a
barrel, down $1.67, or 4%.

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