REFILE-GLOBAL MARKETS-Oil and stocks fall as markets still rattled by Fed minutes

(Corrects spelling of name in paragraph 8)
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Reuters Live Markets blog: LIVE/

By Elizabeth Howcroft
LONDON, Aug 20 (Reuters) - The Federal Reserve's doubts over
the U.S. economic recovery kept markets in the red on Thursday,
even though European stock indexes spent the morning recovering
from initial losses.
Wall Street was knocked from its recent highs on Wednesday
after the Fed's minutes from its July meeting spooked investors
by showing that the swift labour market rebound seen in May and
June had likely slowed. The S&P 500 had reached an all-time high earlier in the week
as prices recovered to their pre-pandemic levels.
The sudden bearishness spilled into Asian markets overnight
and continued in the European session, although shares started
to recover as the morning progressed.
MSCI's broadest index of Asia-Pacific shares outside Japan
had its biggest daily decline in five weeks .MIAPJ0000PUS
while the MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, was down 0.6% at 1042 GMT.
The pan-European STOXX 600 fell 0.8% .STOXX and London's
FTSE 100 was down 1.14% .FTSE . Several Fed policymakers said they may need to ease monetary
policy to help get the economy through the coronavirus pandemic.
"It's easy to forget that we've just experienced one of the
largest and most severe economic shocks on record," said Kasper
Elmgreen, head of equities at Amundi.
"This story is not over yet, despite what the markets might
be indicating," he said.
"We are navigating a ship here with unusually low forward
visibility and a very wide range of outcomes."
Despite the dovish minutes, U.S. Treasury yields and the
dollar rose with investors focusing on parts of the minutes that
showed policymakers downplaying the need for yield caps and
targets.
The dollar index, which measures the currency against a
basket of major peers, was choppy overnight and last at 93.015,
up less than 0.1% on the day =USD .
"The key question for investors is whether the policy
responses are enough to mitigate the economic damage," BH
Global, a fund managed by Brevan Howard, said in an interim
report published on Thursday.
"Many businesses face solvency risks that are not addressed
by borrowing; a debt overhang cannot be cured by more borrowing
no matter how cheap it may be," the fund's report added.
"Improved financial conditions are narrowly focused on a
handful of large companies and benefiting stakeholders who need
relatively little economic assistance. The result is that
financial assets are expensive by many standard metrics.
"So long as a V-shaped recovery in risky assets fails to
create a V-shaped recovery in economic activity, this tension is
a recipe for increased volatility," it said, adding that the
U.S. presidential elections in November could be a catalyst for
such volatility.
Spot gold rebounded overnight but fell when European markets
opened.
It was down 0.2% at 1046 GMT, at $1,926.4615 per ounce
XAU= .
Oil prices fell, as major producers warned of a risk to
demand recovery. OPEC and its allies pressed oil nations that are pumping
above output targets to cut more in August to September.
Brent crude LCOc1 was down 49 cents, or 1.1%, at $44.88 a
barrel, while U.S. oil CLc1 was down 48 cents, or 1.1%, at
$42.45 a barrel.
It will take at least two years for the euro zone to fully
recover from its deepest recession on record, according to a
Reuters poll of economists. Minutes from the European Central Bank's July meeting are
due at 1130 GMT.
Germany's benchmark 10-year Bund yield fell for the fifth
day in a row, hitting its lowest in more than a week at
-0.499% DE10YT=RR .
Markets also remained cautious about acrimonious U.S.-China
relations.
China's commerce ministry said the two countries have agreed
to hold trade talks "in the coming days" to evaluate their Phase
1 trade deal, struck six months ago. Major central banks will reduce the frequency of seven-day
dollar liquidity operations to once a week from September due to
low demand and reduced financial market tension, the Bank of
England said. They are currently held three times a week and are
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Emerging markets http://tmsnrt.rs/2ihRugV
World stocks and oil vs COVID-19 https://tmsnrt.rs/2CzO5pX
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