* Dollar up across the board on safe-haven bid
* Stocks fall, Treasuries gain ahead of Fed statement
* Crude, copper down as China imports slow in July
By Manuela Badawy
NEW YORK, Aug 10 (Reuters) - World stocks slumped and the
dollar rose broadly on Tuesday on weak Chinese data and
uncertainty over whether the U.S. Federal Reserve will take
aggressive action to help the faltering economic recovery.
U.S. Treasury prices rose in a flight to quality ahead of
the central bank decision, and commodity prices fell after data
showed Chinese imports slowed in July.
The euro extended losses against the dollar to trade more
than 1 percent lower as the greenback was boosted by a growing
view the Fed's Federal Open Market Committee was unlikely to
announce any aggressive easing measures.
The Fed is not expected to shift interest rates from the
current level near zero, but is seen acknowledging recent
economic weakness and signal a willingness to take more steps
to support the softening recovery. The Fed will issue a
statement at about 2:15 p.m. EDT (1815 GMT).
Investors began to reassess their expectations overnight.
Some see the Fed taking minor steps such as reinvesting funds
to maintain its balance sheet, while others say it will adopt a
wait-and-see attitude until at least next month. For details,
see []
"We don't think that the Fed will alter the language in its
FOMC statement or announce any restarting of quantitative
easing," said Amelia Bourdeau, a currency strategist at UBS AG
in Stamford, Connecticut. "Dollar shorts are being covered so
we're seeing some dollar strength."
The dollar advanced nearly 1 percent against a basket of
currencies <.DXY>. Against the yen the greenback was up 0.1
percent at 86.07 yen. <JPY=>
The euro fell as low as $1.3090 <EUR=> on electronic
trading platform EBS, down 1.1 percent on the day, while
sterling slipped more than 1 percent to $1.5722. <GBP=>
World stocks measured by the MSCI All-Country World Index
<.MIWD00000PUS> dropped 1.4 percent, and the Thomson Reuters
global stock index <.TRXFLDGLPU> fell 1.4 percent.
The Dow Jones industrial average <> fell 92.60 points,
or 0.87 percent, at 10,606.15. The Standard & Poor's 500 Index
<.SPX> lost 11.27 points, or 1.00 percent, at 1,116.52. The
Nasdaq Composite Index <> shed 33.76 points, or 1.46
percent, at 2,271.93.
The S&P 500 fell below its 200-day moving average ahead of
the Fed statement. The 200-day moving average, now at 1,115.50,
is a widely followed technical signal, and if it closes below
that point, it could indicate a turnaround in market momentum.
CHINESE SIGNALS
The MSCI emerging markets benchmark <.MSCIEF> dropped 1.5
percent, with China's Shanghai Composite Index <> down 3
percent after data showed Chinese import growth below
expectations, pointing to slowing domestic demand and economic
activity. []
EPFR Global, which tracks funds domiciled globally with $13
trillion in total assets, said Monday that emerging market
equity and bond funds attracted sizable inflows during the week
ending Aug. 4.
In Europe, the FTSEurofirst 300 <> index lost 1
percent percent, led lower by basic resources stocks <.SXPP>
following the Chinese data.
Copper <MCU3> fell to its lowest in nearly two weeks, and
crude oil futures <CLc1> lost 1.6 percent to $80.22 a barrel on
concerns that China, the world's second largest energy
consumer, would buy less crude.
U.S. Treasury debt prices rose, keeping benchmark yields
near 15-month lows.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
1/32, with the yield at 2.8252 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 1/32, with the yield at
0.5531 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
up 14/32, with the yield at 3.994 percent.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Additional reporting by Chris Reese, Wanfeng Zahou and
Rodrigo Campos in New York, Dominic Lau in London; editing by
Jeffrey Benkoe)
