* Bulls hope Fed Chairman Powell will sound dovish enough
* European shares weaker for a fourth day
* Dollar supported as Treasury yields edge up from lows
* Euro helped higher by better-than-expected French data
* Oil prices up as U.S. stockpiles fall
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Asian stock markets : https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, July 10 (Reuters) - Shares were treading water on
Wednesday while rising Treasury yields kept the dollar steady,
as investors waited to hear whether the world's most powerful
central banker would confirm or confound expectations for a U.S.
rate cut this month.
MSCI's broadest index of world stocks .MIWD00000PUS was
little changed after three days of losses. Europe's subdued
start reflected pre-event caution rather than how the day would
pan out.
London's FTSE .FTSE edged up 0.2% and Paris .FCHI also
rose after better-than-expected French industrial data
Germany's Dax .GDAXI lagged with a loss of 0.1%
and E-Mini futures for the S&P 500 ESc1 were a shade lower.
.EU
Japan's Nikkei .N225 had also finished lower and Chinese
blue chips .CSI300 barely budged as data showed inflation
remained subdued.
A worrying lack of inflation globally is one reason
investors are counting on Federal Reserve Chair Jerome Powell to
sound suitably dovish when he testifies to Congress on
Wednesday. Futures 0#FF: still fully price in a 25-basis-point cut at
the Fed's July 30-31 meeting, but they no longer suggest a
half-point move. They had implied a 25% probability of an
aggressive cut before an upbeat U.S. jobs report on Friday.
FEDWATCH
"I think the market seems to be veering towards a less
dovish message from Powell than was the prevalent a couple of
weeks ago," said Bank of New York Mellon senior strategist Neil
Mellor.
He still thought the Fed would cut by 25 basis points this
month -- the first U.S. cut since the financial crisis -- but
whether it keeps going was much less clear.
"The real interest is what happens thereafter," Mellor said.
"If we are talking about a stronger dollar, then we have to bear
in mind comments from President Donald Trump last week, who
said, 'Well, perhaps we should start manipulating the dollar.'"
Overnight, Atlanta Fed President Raphael Bostic said the
central bank was debating the risks and benefits of letting the
U.S. economy run "a little hotter." Meanwhile, U.S. and Chinese trade officials held
"constructive" talks on trade by phone on Tuesday, White House
economic adviser Larry Kudlow said. Wall Street had been duly circumspect, with the Dow .DJI
ending down 0.08%, while the S&P 500 .SPX added 0.12% and the
Nasdaq .IXIC 0.54%.
A LITTLE MORE YIELD
The cooling in U.S. rate fever has seen bonds give back just
a little of their rally. Yields on two-year Treasuries rose
US2YT=TWEB to 1.917% from their recent low of 1.696% and
Europe's benchmark yields up around five basis points.
That in turn has helped the dollar index against a basket of
currencies rebound to 97.500 .DXY from a June low of 95.843.
The dollar also gained to 108.92 yen JPY= , though the
brighter French data helped the euro gain to $1.1225 EUR= ,
still down from its $1.1412 level of just a couple of weeks ago.
/FRX
The Mexican peso MXN= began to recover after sliding on
Tuesday when Finance Minister Carlos Urzua suddenly resigned,
citing "extremism" in economic policy. The Canadian dollar CAD= was on the defensive before a
Bank of Canada meeting, in case policymakers tried to slow the
currency's recent rally. CAD/
Gold fell 0.3% to $1,393.68 per ounce XAU= as the dollar
gained.
Oil prices rose on Middle East tensions and news that U.S.
stockpiles fell for a fourth week in a row. O/R Brent crude
LCOc1 futures gained 64 cents to $64.80. U.S. crude CLc1 was
up 82 cents to $58.65 a barrel.
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Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
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