* Deutsche Bank shares fall 8 pct on capital increase
* Geopolitics, Trump cool risk appetite
* Oil markets see-saw on Iraq comment, IEA forecast
By Herbert Lash
NEW YORK, March 6 (Reuters) - Key world equity markets fell on Monday as U.S. President Donald Trump's allegations that he was wiretapped by his predecessor dimmed the prospects for U.S. tax reform plans, while the dollar rose on improved chances an anti-EU candidate will become France's president.
Trump offered no evidence when he alleged, in a series of tweets on Saturday, that President Barack Obama had wiretapped him. That, combined with rising scrutiny of his campaign's ties to Russia, put a damper on investor enthusiasm for stocks.
Alain Juppe, who served as French prime minister from 1995 to 1997, said he would not seek his country's presidency in April elections, a development seen as likely boosting the candidacy of far-right party leader Marine Le Pen.
A poll last week showed that if Juppe replaced the scandal-hit Francois Fillon as candidate, he would likely win the election's first round of voting in a scenario that would likely have knocked the anti-European Union Le Pen out of the race.
The news sent the euro 0.34 percent lower to $1.0584 while the dollar rose against an index of six major world currencies by 0.13 percent to 101.670.
Stocks on Wall Street fell, following a retreat in European shares that were weighed by a fall in Deutsche Bank shares. The German lender had unveiled an 8 billion-euro cash call as part of a major reorganization.
Deutsche Bank closed down 7.89 percent, making the stock the biggest drag to the FTSEurofirst 300 index . The pan-European gauge of leading regional shares closed down 0.54 percent at 1,472.94.
European stock market losses were limited by fresh deal-making activity in the auto and asset management sectors, which helped the index stay less than 1 percentage point below a 15-month peak hit last week.
MSCI's all-country index of worldwide stocks fell 0.17 percent as concerns about Trump's ability to see his economic agenda through weighed on equity markets.
"The market has rallied significantly on the idea that some of the Trump business proposals, particularly the tax proposals, would be implemented," said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.
"Distractions over the weekend cause people to rethink whether the administration will be bogged down in other issues," he said.
The Dow Jones Industrial Average fell 40.85 points, or 0.19 percent, to 20,964.86. The S&P 500 lost 7.45 points, or 0.31 percent, to 2,375.67 and the Nasdaq Composite dropped 20.66 points, or 0.35 percent, to 5,850.10.
Oil prices see-sawed after Iraq's oil minister said the Organization of the Petroleum Exporting Countries would likely need to extend its production cuts into the second half of 2017.
Those remarks were tempered by a forecast of potential shale oil growth from the U.S. International Energy Agency.
Crude has been range-bound for more than 60 days, constrained by concerns that U.S. output may counter OPEC's agreement to reduce output during the first half of the year.
Brent crude rose 6 cents to $55.96 a barrel while U.S. crude fell 11 cents a barrel at $53.22.
U.S. Treasury prices fell. The benchmark 10-year Treasury yield was down 1/32 to yield 2.4961 percent.
In Europe, high-grade euro zone government bond yields edged lower on expectations the European Central Bank will maintain its ultra-loose monetary policy stance this week.
Germany's benchmark 10-year Bund yield fell 1.2 basis points to 0.345 percent, off a two-week high hit on Friday.
Reporting by Herbert Lash; Editing by Bernadette Baum