* Dollar loses all gains since Trump election
* S&P 500 seen easing off record highs, no panic
* Politics, fading U.S. econ momentum spurs risk-off mode
* European stocks weak, but outperform U.S. peers
* Gold up on dollar weakness, oil down
By Vikram Subhedar
LONDON, May 17 Concern that U.S. President
Donald Trump's reform agenda could be slowed down, and that
Trump himself could even face the threat of impeachment, added
to disappointing U.S. economic data on Wednesday to hit the
dollar and spur a pullback in richly valued stocks.
Reports that Trump asked then-FBI Director James Comey to
end a probe into his former national security adviser have
raised questions over whether obstruction of justice charges
could be laid against the president.
This follows a week of turmoil at the White House after
Trump fired Comey and then discussed sensitive national security
information about Islamic State with Russian Foreign Minister
So far, broadly upbeat global growth has underpinned risky
assets and supported the multi-year lows in measures of market
But the retreat in the dollar, which has now given up
all the gains it made following Trump's presidential election
win in November, and a pull-back from record highs for world
stocks underscores investor unease about this week's headlines.
"The Trump issue seems to come in waves, and now we have
another wave," said Hans Peterson, global head of asset
allocation, at SEB Investments.
"I have been asked if he is going to be impeached. I think
that is the type of discussion some (investors) are having,"
Peterson said, pointing out that institutional clients are
U.S. stock futures were off 0.5 percent, though they
were still close to record highs.
"It is the ambitiously valued US equity market which needs
watching in respect of the long-term risk outlook," strategists
at Morgan Stanley wrote in a note to clients.
At nearly 18 times forward earnings, the S&P 500
trades at a significant premium to its long-term average
valuations of 15 times, according to Thomson Reuters data.
More attractively valued European stocks slipped slightly,
although the region's brighter economic outlook and
better-than-expected corporate profits continue to draw
Upbeat growth prospects and signs of stronger regional
integration also spurred flows into regional bond markets,
narrowing the gap between U.S. and German government borrowing
costs to its tightest level in over six months.
This has started to partly reverse a trend that began during
the euro zone debt crisis of 2011/2012, where the single
currency bloc and the United States' economic paths appeared to
This reversal was also evident in currency markets, with the
euro climbing to its highest since Nov. 7 - just before
the U.S. presidential election - against the dollar.
Recent U.S. data, which includes softer-than-expected retail
sales and inflation, has raised concern about the strength of
"The political morass that has engulfed the Trump
Administration is a major distraction", said BBH currency
strategists in a note to clients, adding that investors were
already concerned about the momentum of the U.S. economy.
Meanwhile, the euro zone economy started the year with
robust growth that outstripped that of the United States and set
the stage for a strong 2017.
"At the moment everyone is focusing on the political relief
in Europe and the political unrest in the U.S.," ING's senior
rates strategist Martin van Vliet said.
In commodity markets, safe-haven gold hit a two-week
high, climbing 0.6 percent to $1,243.31. The precious metal has
risen for five straight days.
Data showing an increase in U.S. crude investors hit oil
prices as concerns about oversupply despite efforts by top
producers Saudi Arabia and Russia to extend output cuts once
Brent crude fell 0.3 percent to $51.53 a barrel
while U.S. West Texas Intermediate (WTI) crude slipped
(Additional reporting by Marc Jones and John Geddie; Editing by