GLOBAL MARKETS-Stocks slip as investors wait for U.S. stimulus

* European shares down 1% in volatile trading
* FTSE down 2%
* Mining index loses 1.7%
* Dollar falls to two-year low
* Pound at five-month high after BoE keeps rates steady
* Investors on tenterhooks for U.S. stimulus news
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Tom Wilson
LONDON, Aug 6 (Reuters) - Stocks slipped on Thursday as
investors waited for signs of agreement on a U.S. aid package to
counter damage from the coronavirus pandemic, with poor
corporate earnings reports also weighing on European shares.
The Euro STOXX 600 .STOXX fell 1%, with London's FTSE
.FTSE shedding 1.6% as the pound jumped to a five-month high.
The Bank of England had earlier left interest rates unchanged,
saying it was still weighing the risks of cutting rates below
zero to revive growth.
Paris .FCHI fell 1.2% and Frankfurt .GDAXI 0.9% after
worse-than-expected corporate earnings reports.
Europe's mining index .SXPP fell 2.4% after Glencore
GLEN.L scrapped its dividend. AXA AXAF.PA slumped 4.4% after
it dropped its 2020 earnings target and said it wouldn't make
additional payouts to shareholders in the fourth quarter.
Almost 60% of STOXX 600 companies that have reported results
so far have topped lowered estimates, according to Refinitiv
data. In a typical quarter, half beat estimates.
S&P 500 futures ESc1 turned negative.
The MSCI world equity index .MIWD00000PUS , which tracks
shares in 49 countries, fell 0.2% and was on course to end three
straight days of gains.
Markets are waiting for cues on the shape of a U.S. fiscal
recovery package, currently subject to political wrangling in
Washington, said Hugh Gimber, global market strategist at J.P.
Morgan Asset Management.
Top congressional Democrats and White House officials
appeared to harden their stances on the relief plan on
Wednesday, with few hints of compromise or that an unemployment
benefit as generous as $600 a week could be reinstated.
"Stocks are really struggling to find direction until we
know the outcome of those negotiations," Gimber said. "The clock
is ticking for U.S. policymakers to get something done."
Fears that economic recoveries across major economies are
diverging have been playing out in currency markets, with the
dollar's two-year supremacy at risk.
With figures on jobless claims in the U.S. labour market
looming at 1230 GMT, the dollar =USD fell in early trading to
a two-year low as investors weighed whether the U.S. economic
recovery from the coronavirus hit was lagging other major
economies.
By late morning it had recovered and was last up 0.1% at
92.914.
The euro EUR= climbed to its highest against the dollar
since May 2018 before giving up its gains. It was last down 0.2%
at $1.18430.
That weak dollar, strong euro trend is set to continue into
next year, a Reuters poll showed, on expectations the U.S.
economic recovery is flagging, especially compared with Europe.
STEADY
The British pound GBP=D3 rose to a five-month high against
the dollar after the Bank of England left interest rates at 0.1%
and warned about possible risks from taking rates below zero.
Negative rates "are part of our toolbox ... But at the
moment we do not have a plan to use them," Bank of England
Governor Andrew Bailey told reporters.
The BOE offered less grim predictions on unemployment and
GDP contraction than it had in May, but it said the British
economy would not recover to its end-2019 size until the end of
next year. In May, it had said that milestone would be reached
during the second half of 2021. "More important for pound performance in the near-term were
the BoE's comments on the likelihood of further policy easing
later this year," analysts at MUFG wrote. "The comments did not
send a strong signal that the BoE is moving closer to adopting
negative rates.
Sterling was last up 0.4% at $1.3170.
For Reuters Live Markets blog on European and UK stock
markets, please click on: LIVE/

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