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GLOBAL MARKETS-Trump rally pauses as stocks, dollar slip on profit taking

Published 22/12/2016, 03:12 am
© Reuters.  GLOBAL MARKETS-Trump rally pauses as stocks, dollar slip on profit taking
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* Dollar index slips, euro regains $1.04

* Wall Street opens lower, following European stocks

* Gains in Asia support global equity gauge

* Oil falls on surprise build in U.S. inventories (Updates to U.S. market open, adds data, quote, changes dateline, previous LONDON)

By Dion Rabouin

NEW YORK, Dec 21 (Reuters) - Stocks edged down and the dollar eased from 14-year highs on Wednesday, giving back some of the gains chalked up since Donald Trump's U.S. election victory as investors took profits on the rally in risk assets over the past six weeks.

Wall Street opened modestly lower, in line with European indexes, with the Dow Jones Industrial Average remaining just below the 20,000 mark.

U.S. stocks have been roaring ahead since the election, with the Dow up 9 percent and the S&P 500 gaining 6 percent since Nov. 8 on hopes President-elect Trump's proposed deregulation and fiscal stimulus will boost economic growth.

"We're looking at a relatively quiet morning as investors wind down ahead of the holiday weekend," said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

"The market has been rallying since the election and these minor pauses are welcome and necessary as traders take some profit."

The Dow Jones Industrial Average .DJI fell 12.11 points, or 0.06 percent, to 19,962.51, the S&P 500 .SPX lost 2.66 points, or 0.12 percent, to 2,268.1 and the Nasdaq Composite .IXIC dropped 8.22 points, or 0.15 percent, to 5,475.72.

The dollar index .DXY , which tracks the greenback against six currencies, fell 0.45 percent, retreating after hitting its highest level since December 2002 on Tuesday.

U.S. 10-year Treasury yields, which reached their highest in more than two years last week after the Federal Reserve raised interest rates and forecast more hikes in 2017 than most investors had expected, fell to 2.55 percent US10YT=RR .

Benchmark 10-year yields have risen almost 80 basis points since early November.

"We've been trading in a fairly tight range the last couple of days with low volumes. It's very holiday-like trading," said Dan Mulholland, head of Treasuries trading at Credit Agricole (PA:CAGR) in New York.

"I think people are trying to assess how the next year is going to start."

The euro, which touched a 14-year low on Tuesday, rose 0.6 percent to $1.0448 EUR= while the yen JPY= gained 0.4 percent to 117.35 per dollar.

The Swedish crown SEK= rose 1.4 percent, its biggest one-day gain in six months, to a two-month high of 9.6350 after the Riksbank only narrowly voted to add to its bond-buying program. pan-European STOXX 600 index .STOXX fell 0.4 percent, having hit an 11-month high on Tuesday, led lower by banking shares. .SX7P

Italy's Monte dei Paschi di Siena, which must raise 5 billion euros by the end of the month to avoid state intervention, was once again in focus. Its shares BMPS.MI dropped as much as 17 percent. stocks rebounded as fears of a liquidity squeeze in the banking system subsided after risks from a bond scandal appeared contained, and on a pledge to deepen reforms in state-owned sectors.

The blue-chip CSI300 index .CSI300 rose 0.91 percent, to 3,339.54 points, while the Shanghai Composite Index .SSEC gained 1.15 percent to 3,138.54 points, both snapping a two-session losing streak

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS inched up 0.1 percent after a string of losses. Tokyo's Nikkei share average .N225 fell, pulling back from earlier one-year highs to close down 0.3 percent.

The gains in some Asian bourses counterbalanced losses in the U.S. and Europe to leave MSCI's measure of global equity markets .MIWD00000PUS flat on the day.

Oil prices fell after the U.S. Energy Information Administration reported an unexpected crude inventory build. Brent crude fell 0.3 percent to $55.18 a barrel.

Gold XAU= edged up 0.2 percent to $1,134 an ounce as the dollar slipped.

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