* Euro hits 21-month high of $1.1599, Aussie hits one-year peak
* Silver soars to a six-year peak, gold at nine-year high
* World FX rates in 2020 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, July 22 (Reuters) - News that the United States had ordered China to close its consulate in Houston fanned a bout of selling in equity markets on Wednesday, while the euro basked at a 21-month high in the afterglow of the previous day's EU recovery fund deal.
It was turning out to be a choppy day. Most global bourses had been consolidating recent gains anyway, but the news that Beijing had been told to shut its Houston consulate in three days had spurred on the sellers, leaving Europe down nearly 1% .EU and futures pointing to an early dip for Wall Street. .N
Precious metals markets were wild again too. Silver made another 7% leap XAG= after some swerving around to hit a six-year high of $23 per ounce, while gold's XAU= top of $1,865 an ounce took its July surge to nearly 20%. GOL/
In FX, the euro was perched above $1.1575 EUR= for the first time since October 2018, and despite a minor tick up on the Houston headlines, the dollar =USD was at its lowest against a basket of the main world currencies since March. /FRX
"With the U.S. struggling with the pandemic, there is a growing divergence of growth expectations with Europe and Asia Pacific," said RBC analyst Alvin Tan.
"We'll keep an eye on what is happening in Houston, but the fact is that in a typical up-cycle for the global economy the dollar tends to underperform, of course".
China's foreign ministry spokesman Wang Wenbin told a regular daily news briefing that the United States had abruptly told Beijing on Tuesday to close its consulate officials said the step had been taken to protect American intellectual property and information -- U.S. media reports in Houston on Tuesday night had said documents were being burned in a courtyard at the consulate -- but Beijing condemned the order and threatened retaliation.
"We urge the U.S. to immediately revoke this erroneous decision," China's foreign ministry said, with a source later telling Reuters China was considering closing the U.S. consulate in Wuhan.
China's offshore yuan weakened past 7 per dollar on the news and was last at 7.0028 CNH=EBS . The dollar index inched up 0.2% from March lows it had hit on Tuesday before recoiling back again in the first flurries of U.S. trading.
"That headline triggered some profit taking, quite an aggressive one in USDCNY, USDCNH," said Christy Tan, head of markets strategy for Asia at National Australia Bank in Singapore.
"It's a timing issue. All this is coming as tensions between the U.S. and China are escalating. This added fuel to fire," she said.
PEDAL TO THE METALS
The pan-European STOXX 600 .STOXX stood down almost 1% ahead of U.S. trading. Commodity-linked stocks .SXPP along with travel .SXTP and autos .SXAP provided the biggest drags with falls of between 1.5% - 2%. .EU
S&P 500 futures ESc1 had clawed back some ground but were still down 0.3% ahead of the start of trading. It followed a subdued session on Tuesday too amid concern about rising U.S. coronavirus infections and political disagreement over the next U.S. fiscal aid package. .N
The United States reported more than 1,000 deaths from COVID-19 on Tuesday, the first time that grim milestone has been passed since June. President Donald Trump warned that things would probably get worse before they got better. the dollar bulls largely out of action, the euro charged to $1.1599 EUR= . The Australian dollar AUD=D3 held near a year-high of $0.7144 having been bolstered by upbeat Aussie retail sales data.
Italy's government bond market borrowing costs were also at their lowest since March on the improved EU recovery fund sentiment. Rating agency S&P Global called the joint debt element of the deal a boost for EU's sovereign ratings. story is not over yet, but the establishment of a shared fiscal mechanism is a breakthrough for EU sovereign creditworthiness," one of S&P's top sovereign analysts, Frank Gill, said
Copper prices drooped 1.3% after the Houston headlines CMCU3 . Shanghai SCFcv1 and Dalian iron ore futures DCIOcv1 rose for a second straight session on expectations of strong Chinese demand. MET/L IRONORE/
Oil prices remained rangebound, hurt by inventory concerns. Brent futures LCOc1 slipped 0.4% to $44.14 per barrel and U.S. crude fell 0.5% to $41.70 a barrel. O/R