GLOBAL MARKETS-Stocks gain as vaccine rally falters

* Equities edge up
* Italian bond yields maintain multi-week lows
* Oil gains
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Tom Arnold and Tom Westbrook
LONDON/SINGAPORE May 20 (Reuters) - Global stocks rose on
Wednesday as investors regained hopes of recovery from a
coronavirus-fuelled recession, while oil prices also
strengthened.
Italian bonds remained at their multi-week lows, continuing
to gain from a Franco-German plan for a 500 billion-euro
coronavirus recovery fund, ignoring a hawkish counter-proposal
in the works. Europe's STOXX 600 index .STOXX recovered from earlier
losses to add 0.2%. The blue-chip FTSE 100 .FTSE gained 0.3%.
The world stock index .MIWD00000PUS was 0.2% stronger, but
still short of its highest level since March 9, reached on
Tuesday.
"We are in one of those situations where if there's no bad
news, the path of least resistance is for equities to move
higher," said James Athey, investment director, Aberdeen
Standard Investments."
Wall Street ended Tuesday lower after medical news website
STAT cast doubt on a Moderna Inc MRNA.O COVID-19 vaccine
trial. The report said the trial results, which had rallied
global stocks this week, lacked detail. Two-thirds of 223 fund managers surveyed by Bank of America
reckon recent gains are a bear-market rally.
S&P 500 futures ESc1 were last up 1.1%. Oil gained and
gold XAU= rose to $1,748.34 per ounce. GOL/
Italy's 10-year bond yield was holding near
five-and-a-half-week lows hit following the recovery fund
announcement IT10YT=RR . The gap with Germany's 10-year yield
was at 210 basis points, close to Tuesday's five-week lows.
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The U.S. dollar extended falls, sinking 0.3% to a three-week
low. The euro edged up 0.2% to $1.0960 EUR=EBS ,
near a two-week peak of $1.09755 reached on Tuesday, supported
by the Franco-German proposal for recovery fund. Elsewhere, New Zealand central bank chief Adrian Orr
backtracked a little from the possibility of negative rates, a
prospect he had flagged just days before. That helped support
the kiwi dollar NZD=D3 . Doubts about the outlook held back commodity prices.
Japanese business confidence slumped to a decade low as the
economy entered recession. Australian retail sales suffered
their steepest-ever decline in April. And the U.S. economy won't recover its lost ground until
sometime after next year, the non-partisan Congressional Budget
Office said on Tuesday. Brent crude futures LCOc1 were at $35.51 per barrel, up
2.5%. U.S. crude CLc1 was 2.3% higher at $32.69 a barrel on
signs of improving demand and a drawdown in U.S. crude
inventories. O/R
"While countries have started to relax restrictions on
economic and social activities, economies will not return to
where things were before the outbreak," said strategists at
Singapore's DBS bank in a note.
"Geopolitical tensions, especially between the U.S. and
China, have also returned and are likely to intensify into the
U.S. elections in November."

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(Editing by Larry King)