November 29, 2018 / 5:08 PM / 6 months ago

GLOBAL MARKETS-Stocks mixed, Wall St dips on trade jitters as Fed-spurred rally fizzles

* Wall Street dips after Trump says “long way to go” on trade

* Investors cautious on trade before Trump-Xi G20 meeting

* Sterling falls after Brexit warning

* Graphic: World FX rates in 2018 (Changes byline, dateline previous LONDON; recasts with Wall Street open; updates throughout)

By Hilary Russ

NEW YORK, Nov 29 (Reuters) - World shares were mixed, with Wall Street edging lower on Thursday amid jitters over U.S.-China trade talks, while the dollar and Treasury yields softened after investors digested recent comments by Federal Reserve Chair Jerome Powell.

Powell said on Wednesday U.S. interest rates were “just below” neutral, less than two months after saying rates were probably “a long way” from that point. Many investors read the remarks as signalling the Fed’s three-year tightening cycle was drawing to a close.

His comments briefly pushed the U.S. 10-year bond yield below the psychologically key 3 percent level earlier on Thursday, its lowest since mid-September. The yield, which had risen as high as 3.25 percent earlier this month, inched back to 3.0152 percent, from 3.044 percent late on Wednesday.

The Dow Jones Industrial Average fell 154.99 points, or 0.61 percent, to 25,211.44, the S&P 500 lost 19.06 points, or 0.69 percent, to 2,724.73 and the Nasdaq Composite dropped 59.01 points, or 0.81 percent, to 7,232.58.

Other stock markets were broadly higher, with MSCI’s gauge of stocks across the globe adding 0.23 percent.

In Europe, stock gains were driven by the tech, mining and autos sectors, which were the worst hit by recent losses. The pan-European STOXX 600 index rose 0.11 percent.

Market participants are closely watching a meeting between Trump and Chinese leader Xi Jinping at the G20 summit on Saturday at which the leaders are expected to discuss trade.

Trump said on Thursday there was “a long way to go” on tariffs with China and urged companies to build products in the United States to avoid them.

“The messaging from the U.S. over the last four weeks has been characteristically erratic,” said David Page, senior economist at AXA Investment Managers.

Thursday’s Wall Street dip comes a day after all three major indexes had rallied to close more than 2 percent higher following Powell’s remarks.

The dollar, which has outperformed bonds and the benchmark S&P 500 stock index this year amid rising interest rates and safe-haven flows triggered by global trade tensions, fell back.

The dollar index, tracking it against a basket of six major currencies, fell 0.04 percent, with the euro up 0.22 percent to $1.1391.

Sterling was last trading at $1.2785, down 0.30 percent on the day, after Bank of England Governor Mark Carney warned a disorderly Brexit could trigger a worse economic downturn for Britain than the financial crisis.

In commodities, oil prices rose after sources said Russia had accepted the need for cuts in production together with OPEC.

U.S. crude rose 2.11 percent to $51.35 per barrel and Brent was at $59.54, up 1.33 percent.

Italy’s borrowing costs slipped, with 10-year yields dipping around 2 bps.

A bond auction enjoyed much better buying interest than at last week’s deal targeting retail investors as the government has shown signs it could compromise with the European Union on its budget deficit target.

Additional reporting by Helen Reid and Amanda Cooper in London; Amy Caren Daniel in Bengaluru; Editing by Bernadette Baum

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