GLOBAL MARKETS-Waning European recovery saps stocks momentum, knocks euro

* Rally runs out of steam after Wall Street scales record
peaks
* Euro suffers, dollar gains after disappointing data
* German, French, eurozone PMIs below expectations
* China's yuan scales to seven-month high

By Karin Strohecker
LONDON, Aug 21 (Reuters) - Sombre economic numbers including
euro zone data pointing to a faltering recovery doused global
stock market gains on Friday and saw the euro recoil further
from recent peaks.
Global equities dipped into the red .MIWD00000PUS and the
pan-European STOXX 600 .STOXX gave away early gains to fall
0.6%, while U.S. futures ESc1 NQc1 pointed to a 0.4% drop at
the open.
The loss of momentum came after fresh numbers painting a
muted economic outlook, with purchasing managers' index releases
from France and Germany as well as the wider euro zone falling
short of expectations, flagging slowing momentum in the
recovery. "The eurozone flash PMIs for August paint a rather muted
picture for the single currency area's nascent economic
recovery," said Moritz Degler, senior economist at Oxford
Economics.
"The survey contains some strong evidence that the recovery
has slowed in August, particularly in the services sector,"
Degler added.
Analysts pointed to rising infection numbers having tempered
economic activity. On Thursday, France saw a post-lockdown
record in new infections, while countries across the region
imposed fresh travel restrictions.
News that Pfizer PFE.N reported positive early data from a
potential COVID-19 vaccine and could be on track to seek
regulatory review by October did little to brighten the mood.
STIMULUS
European bourses had started the day on a brighter note,
following gains in Asia after U.S. tech shares closed higher on
Thursday. The S&P 500 has rallied 54% from its March low in a
world awash with monetary and fiscal stimulus, but money
managers are questioning the future trajectory.
"We think equity markets, certain credit markets, and the
U.S. dollar have yet to fully reflect the long-term impact of
ultra-loose Fed policy," said Mark Haefele, chief investment
officer at UBS Global Wealth Management.
But it wasn't just European data which delivered a dampener.
Overnight, clouds returned to the U.S. labour market
outlook, with weekly jobless claims back over a million to put
the total number of Americans on unemployment benefits at 28
million.
The Philadelphia Federal Reserve's business index also
missed expectations and together the weak readings pushed down
nominal U.S. yields and dragged on the dollar. Benchmark U.S.
10-year debt US10YT=RR yields were creeping lower to stand at
0.6347%.
In currency markets, the dollar index .DXY jumped 0.8%, on
track to end what would have been a ninth consecutive weekly
decline. Meanwhile the euro extended losses to drop as much as
0.8% to $1.1768 EUR=EBS , its lowest level in nearly 10 days.
The Japanese yen JPY= hovered at 105.53 after an inflation
miss supported real yields, while China's yuan surged to a
seven-month high as traders bet on Chinese growth.
Sterling weakened GBP= and was last down 0.8% at $1.3108
amid scant progress in Brexit talks between Brussels and London
ahead of a year-end deadline to reach a deal. In commodity markets, oil prices were on track for a small
weekly loss, with Brent crude futures LCOc1 slipping to $44.29
a barrel and U.S. crude future CLc1 to $42.24 a barrel.
Gold XAU= was a touch softer at $1,918.3 an ounce.

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