* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
* World stocks index adds to worst day in six months
* Trump woes mount after report on aides' Russia contacts
* Dollar steadies, but loses some of Asian momentum
* ECB talks about paring back stimulus if inflation recovers
By Marc Jones
LONDON, May 18 (Reuters) - Swirling uncertainty over U.S. President Donald Trump's political future saw world stocks extend their steepest fall in over six months on Thursday, though there were signs of stabilisation elsewhere as the dollar and gold steadied.
Reports that Trump had tried to intervene in an investigation into alleged Russian interference in last year's U.S. election and that his aides had numerous undisclosed contacts with Russian officials kept market tensions high stocks fell sharply after Wall Street suffered its worst day in over eight months overnight .N and Europe's main bourses FTSE .GDAXI .FCHI dropped between 0.8 and 1.3 percent as the selling momentum built again.
Rabobank strategist Michael Every said the key question was whether markets would "calm down, or panic more."
"The obvious point we've made before repeatedly is that Trump now has much less political capital to spend in the Capitol, and that makes Trumpflation far less likely. Yet things seem to be rapidly moving beyond that point, opening up other scenarios," he said.
While stocks flashed warning lights again, the dollar seemed to be going for the 'calm down' option.
It pulled out of a dive that had taken it to its lowest level in six months against other top currencies including the euro and the yen /FRX .
A mini-recovery in Asia as Japan posted its best economic performance in a year looked to have run out of steam however. It eased back again in European trade to leave it at $1.1136 per euro EUR= and buying 110.97 Japanese yen. JPY= .
There was more support for the euro too as one of the European Central Bank's most influential policymakers, Executive Board member Benoit Coeure, said it should not delay paring back its stimulus once it was convinced inflation has recovered. much gradualism in monetary policy bears the risk of larger market adjustments when the decision is eventually taken," Coeure told Reuters in an interview in which he also said the bank's bond-buying programme was "not set in stone".
The political jitters coming out of the United States remained the dominant factor for traders, however.
Germany's benchmark 10-year Bund yield fell to a two-week low and U.S. Treasury yields were flat having dropped as far as 2.2120 percent the previous day, which had been a one-month low US10YT=TWEB . US/
THE GONALD?
The allegations surrounding Trump have not only thrown doubt over the future of the pro-growth policies he promised, but they have raised the possibility he could end up leaving the White House prematurely.
Trump says he is being given one of the toughest rides of any president in U.S. history.
But a small number of his fellow Republicans called on Wednesday for an independent probe of possible collusion between his 2016 campaign team and Russia, and one even mentioned impeachment. Street futures pointed to another, albeit more modest, fall of around 0.2 percent when it reopens later. ESc1 1YMc1
Trump was not the only leader under scrutiny either.
Trouble mounted for Brazilian President Michel Temer, who was recorded discussing payments to silence testimony by a potential witness in the country's biggest-ever graft probe, sources told media including Reuters. exchange-traded fund of Brazilian equities 1325.T fell more about 8 percent in Tokyo after the Brazilian real BRL= had dropped more than 1.2 percent in local markets.
In commodity markets, which have also been highly volatile in recent weeks but due mainly to supply and demand issues, there were steadier signals.
Brent oil futures dipped back to $52.05 a barrel after hitting a two-week high overnight on the back of an ongoing effort by OPEC to cut production. O/R
Safe-haven gold hovered near a two-week high prompted by the weaker dollar and the risk aversion gripping the broader markets.
Spot gold XAU= was at $1,260 an ounce having hit $1,263.02, its highest since May 1 the previous session.
"I would caution that the gold rally has been driven by political news and not necessarily fundamentals. Should the political storm die in Washington, the rally will lose steam," said Jeffrey Halley, senior market analyst at OANDA.