* White House failure on healthcare raises worries over tax
* Dollar falls to lowest since Nov. 11
* Risk-off mood drives stocks, commodities lower
* Safe havens such as gold, bonds, yen gain
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Jemima Kelly
LONDON, March 27 The dollar and share prices
tumbled on Monday, as investors worried that U.S. President
Donald Trump's defeat over healthcare reform foreshadowed
difficulties delivering other key campaign promises, in
particular fiscal stimulus.
Trump's failure to rally enough support from his own
Republican party - which controls both houses of U.S. Congress -
to repeal and replace Obamacare spurred a rush to safe haven
assets such as gold, the Japanese yen and the
Bets that pro-business policies promised by Trump would
boost growth and consumer price rises after years of very low
inflation, leading to a faster pace of U.S. interest rate rises,
took stocks to record highs earlier this year and the dollar to
its highest levels in 14 years.
But those "reflation trades" have since come under selling
pressure as Trump has concentrated his efforts on areas other
than economic reform, and that selling intensified after the
healthcare bill's failure late on Friday.
The dollar index slipped below 99.0, its lowest since
Nov. 11, two days after the results of the presidential vote.
Shares on Wall Street looked set to follow Europe and Asia
downwards, with U.S. stock index futures falling as much
as 1 percent to a six-week low.
"A tidal wave of risk aversion has flooded the financial
markets, ... with global stocks under intense selling pressure
after Donald Trump's failure on healthcare reforms sparked
concerns about his ability to move ahead with tax cuts and
fiscal spending," said FXTM analyst Lukman Otunuga.
Safe-haven U.S. Treasury yields fell to a
one-month low of 2.35 percent, while borrowing costs across the
euro zone also fell, as investors ditched riskier assets and
unwound bets on higher inflation and interest rates.
Analysts said bets that the European Central Bank could look
to tighten monetary policy sooner rather than later were being
The fall in risk appetite dominated European stockmarkets,
with the pan-European STOXX 600 index - which has risen
around 10 percent since Trump was elected - falling around half
a percent on the day.
The Basic Resources index was the biggest sectoral
loser, down 2 percent to a two-week low as copper prices
slipped, while the banking index was down 1.2 percent.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
Fresh off its healthcare bill defeat, the White House warned
rebellious conservative lawmakers on Sunday that they should get
behind Trump's agenda or he may bypass them on future
legislative fights, including tax reform.
"It needs to be seen if (the healthcare defeat) will result
in a 'correction' or if traders are willing to hold out and see
if Trump will have more success with his next bill," Markus
Huber, a trader at City of London Markets, said.
Bucking the weaker trend among European stocks were precious
metal miners such as Randgold and Fresnillo,
both up more than 1 percent, as risk aversion boosted gold,
traditionally used as a safe haven at times of market angst.
Gold prices climbed more than 1 percent to a one-month high
of $1,259 an ounce.
The safe-haven yen also gained more than 1 percent against
the greenback, touching 110.12 yen per dollar, its strongest
since mid-November, while the Swiss franc gained as much as 0.8
percent to trade at its highest levels since Nov. 10.
The euro rose 0.8 percent to a 4-1/2-month high of $1.0882
In Asian trading, falls in stock prices were more moderate,
with MSCI's broadest index of Asia-Pacific shares outside Japan
down 0.1 percent after posting its first weekly
decline last week in three weeks.
In terms of relative valuations, U.S. stocks are trading
well above their historical averages while Asian stocks are
still broadly in line with theirs despite a recent bounce.
Japan's Nikkei, though, fell 1.5 percent as the yen
rebounded in the face of renewed U.S. dollar weakness.
Oil fell further towards $50 a barrel, pressured by
uncertainty over whether an OPEC-led production cut will be
extended beyond June in an effort to counter a glut of crude.
(Additional reporting by Danilo Masilo in Milan and Saikat
Chatterjee in Hong Kong, Editing by Ed Osmond)