(Updates with afternoon trading)
* Dollar falls on perceived ECB path, U.S. political roadblocks
* Europe stock index drops, Germany's DAX off 1.7 pct
* Wall St pulls back from records, GE drops on sour report
* Oil sinks 2 pct, gold shines with weak dollar
By Lewis Krauskopf
NEW YORK, July 21 (Reuters) - The U.S. dollar sank to its lowest in more than a year against key world currencies on Friday as investors assessed comments from the European Central Bank and obstacles to U.S. President Donald Trump's domestic agenda, while a global gauge of stocks was poised to snap a 10-session winning streak.
Gains in the yen, gold and U.S. Treasuries pointed to moves into safe-haven assets rather than stocks that are considered riskier. Oil prices sank 2 percent.
The euro built on sharp gains from a day earlier, rising to near two-year highs against the dollar and undermining European stocks, with Germany's DAX .GDAXI equity index falling 1.7 percent. President Mario Draghi said on Thursday financing conditions remained broadly supportive, and that the euro's appreciation had "received some attention." However, he did not cite that as a problem nor did he directly try to talk the currency down. fact that Draghi didn't necessarily argue too much against the strength of the euro ... certainly gave the green light for individuals to want to own the currency again or actually add to their positions," said Dean Popplewell, chief currency strategist at Oanda in Toronto.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.22 percent, falling after 10 days of gains.
U.S. stock indexes traded modestly lower, pulling back from record high levels reached earlier in the week. Dow Jones Industrial Average .DJI fell 45.46 points, or 0.21 percent, to 21,566.32, the S&P 500 .SPX lost 2.78 points, or 0.11 percent, to 2,470.67 and the Nasdaq Composite .IXIC dropped 8.93 points, or 0.14 percent, to 6,381.07.
General Electric (NYSE:GE) GE.N shares dropped 3.2 percent after the industrial conglomerate's profit report. Visa V.N shares gained 1.8 pct after the payments network operator's results, as a big week of corporate earnings came to an end. market is pausing after another stellar run to record high levels, as people take modest profits off the table and cut back on risk just a little bit going into the weekend," said Randy Frederick, vice president of trading and derivatives for Charles Schwab (NYSE:SCHW) in Austin, Texas.
Next week, investors will be focusing on a meeting of Federal Reserve policymakers, the release of second-quarter economic growth data, as well as another flood of corporate results.
HEADWINDS
In Europe, the pan-European FTSEurofirst 300 index .FTEU3 lost 1.10 percent. strength is set to weigh on euro earners' results, which will likely contribute to subdued beat ratios for the remainder of the season," said Deutsche Bank (DE:DBKGn) equity strategist Wolf von Rotberg.
In currencies, the dollar index .DXY fell 0.41 percent, falling to its lowest point since June 2016. euro EUR= was up 0.37 percent to $1.1672. The Japanese yen strengthened 0.74 percent versus the greenback at 111.08 per dollar.
Aside from the ECB comments, investors were also assessing whether Trump's recent legislative setbacks and developments involving a probe into Russian meddling in the 2016 U.S. general election were threatening his domestic plans for tax cuts and infrastructure spending.
"Compounding the (weaker dollar) move is this latest news on the political front in the U.S. about the Russia investigation expanding to Trump's business affairs," said Alvise Marino, FX strategist at Credit Suisse (SIX:CSGN) in New York. "This is on top of the fact that Senate has not been able to pass anything meaningful on the healthcare front."
U.S. Treasury yields fell in step with European yields as the euro strengthened against the dollar, raising doubts whether the ECB would scale back its bond purchases later in 2017. 10-year notes US10YT=RR last rose 10/32 in price to yield 2.2322 percent, from 2.266 percent late on Thursday.
Oil prices sank after a consultant forecast a rise in OPEC production for July despite the group's pledge to curb output, reigniting concerns the global market will stay awash with crude. crude CLc1 fell 2.3 percent to $45.84 per barrel and Brent LCOc1 was last at $48.19, down 2.25 percent on the day.
Spot gold XAU= added 0.8 percent to $1,253.89 an ounce, as the weaker dollar made bullion cheaper for holders of other currencies. World FX rates in 2017
http://tmsnrt.rs/2egbfVh Global assets in 2017
http://reut.rs/1WAiOSC Global bonds dashboard
http://tmsnrt.rs/2fPTds0 Emerging markets in 2017
http://tmsnrt.rs/2ihRugV
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