GLOBAL MARKETS-World stocks pause in rally, USD bounces from 3-week low

By Koh Gui Qing and Tom Wilson
NEW YORK/LONDON, Oct 13 (Reuters) - The U.S. dollar
rebounded from a three-week low on Tuesday while equity markets
in Europe and the United States eased, as investors took stock
of recent rallies before chasing further gains.
Analysts said Tuesday's pullback in stock markets was by no
means driven by an aversion to risk, especially since investors
are convinced that the U.S. government will unveil more fiscal
stimulus to bolster the economy.
Still, the tempered mood in stock markets was accompanied by
firmer demand for traditional safe-haven assets such as the
dollar and U.S. Treasuries. A stronger dollar in turn weighed on
gold prices.
The S&P 500 .SPX fell 16.8 points, or 0.46%, to 3,517.73,
but still within sight its record high of 3,580.84 struck on
Sept. 2. The Dow Jones Industrial Average .DJI dropped 128.4
points, or 0.45%, to 28,706.11. The Nasdaq Composite .IXIC
dipped 2.2 points, or 0.02%, to 11,877.63
"Markets have already priced in perfection," said Ken
Polcari, chief market strategist at SlateStone Wealth LLC in
Florida. "It's 'buy the rumor, sell the news.'"
European shares also struggled on Tuesday as investors
looked past Chinese trade data that pointed to a buoyant
recovery.
The Euro STOXX 600 .STOXX lost 0.77%, ending three
straight days of gains, with markets in Frankfurt .GDAXI ,
London .FTSE and Paris .FCHI mirroring its moves.
News that Johnson & Johnson JNJ.N was pausing its COVID-19
vaccine candidate clinical trials because of an unexplained
illness in a study participant also gave investors a reason to
take profits for now.
Investors see the quick introduction of a vaccine as key to
helping economies recover. J&J's move comes after AstraZeneca
AZN.L paused late-stage trials of its experimental vaccine in
September, also due to a participant's unexplained illness.
The sentiment in European and U.S. stock markets contrasted
with earlier resilience in Asia, where shares were boosted by
Chinese data that showed exports rising 9.9% in September and
imports swinging to a 13.2% gain, versus a 2.1% drop in August.
The data, which suggests Chinese exporters are recovering
from the pandemic's damage to overseas orders, helped
Chinese blue-chip shares .CSI300 rise 0.33%. MSCI's broadest
index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ,
however, trimmed earlier gains and was little changed by the end
of Tuesday.
In currency markets, investor demand for the dollar helped
the dollar index =USD to climb 0.416% against a basket of
other currencies, putting it on track for its biggest daily
percentage gain in three weeks.
Currency traders were also watching Chinese trade-related
issues. Reports that Beijing has stopped taking shipments of
Australian coal caused the Australian dollar to drop as much as
0.6% to $0.7165 AUD=D4 .
Government bond yields in the euro zone held near recent
troughs, with hefty supply failing to dent a market bolstered by
expectations for further central bank easing.
Germany's 10-year Bund yield touched -0.538% DE10YT=RR ,
its lowest in just over a week. Italian IT10YT=RR and Greek
GR10YT=RR benchmark 10-year debt both hit record lows.
The benchmark 10-year Treasury US10YT=RR yield was last
down 4.3 basis points at 0.7322%. US/
Gold XAU= dropped 1.6% to $1,891.01 per ounce. GOL/