* Markets await possible Fed move to prop up economy
* Crude, copper down as China imports slow in July
* Chinese stocks fall nearly 3 pct
By Dominic Lau
LONDON, Aug 10 (Reuters) - The dollar rose on Friday and
world stocks slipped as investors stayed cautious ahead of
likely moves by the U.S. Federal Reserve to warn about and
possibly prop up a softening economic recovery.
Commodity prices eased as Chinese imports slowed in July.
Speculation has been growing that the U.S. central bank will
at its meeting later on Tuesday signal a need for more stimulus
to support growth or possibly restart asset purchases, as data
since the Fed's last policy-setting meeting in late June has
been weak.
U.S. consumer spending is petering out and manufacturing is
losing steam, while the unemployment rate is stuck at 9.5
percent.
Mere acknowledgement of economic deceleration might
disappoint some investors who have been betting the Fed would
make a bigger move, such as buying bonds to pull down market
rates, known as quantitative easing.
"We're seeing some squaring up of short positions ahead of
the Fed, and there is some risk-off sentiment as well as Asian
stocks closed lower, prompting a sell-off in high yielders such
as the Australian dollar," said Christian Lawrence, currency
strategist at RBC Capital Markets.
The euro fell 0.4 percent to $1.3180 <EUR=>, sterling
slipped 0.5 percent to $1.1.5817 <GBP=D4> and the Australian
dollar was down 0.3 percent at $0.9137 <AUD=>.
The dollar advanced 0.3 percent against a basket of
currencies <.DXY>.
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> eased 0.5 percent, and the Thomson Reuters
global stock index <.TRXFLDGLPU> also fell 0.5 percent.
CHINESE SIGNALS
The MSCI emerging markets benchmark <.MSCIEF> dropped 0.7
percent, with China's Shanghai Composite Index <> down 2.9
percent after data showed Chinese import growth below
expectations, pointing to slowing domestic demand and economic
activity.
In Europe, the FTSEurofirst 300 <> index lost 0.5
percent, led lower by mining stocks following the Chinese
imports data.
Copper <MCU3> fell 1 percent and oil prices <CLc1> were down
0.6 percent to trade just below $81 a barrel, on concerns of
less crude purchases by China, the world's second largest energy
consumer.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
steady at 2.8271 percent.
Societe Generale said it was bullish on U.S. Treasuries on
the possibly of more quantitative easing.
"Scaring the market with an early move is a clear drawback,
but acting late to fight the deflation risk would be even more
costly," it said in a note.
"All in all, Treasuries might pull back a touch if the Fed
fails to deliver today, but this will prove to be a buying
opportunity: the QE debate will come back soon anyway unless the
economy or the inflation data quickly turn around."
(Additional reporting by Tamawa Desai; Editing by John
Stonestreet)
