(Adds close of U.S. markets)
* European shares add to prior day's strong rally
* Wall Street closed mixed; Dow, S&P 500 slide, Nasdaq gains
* Mood restrained by surge in virus cases, China-India spat
* Dollar, debt gain on safe-haven buying
By Herbert Lash
NEW YORK, June 17 (Reuters) - Global equity markets closed little changed on Wednesday as a rally on economic and vaccine hopes faded, while fresh coronavirus outbreaks and rising geopolitical tensions in Asia boosted demand for the dollar and safe-haven debt.
Optimism over a quick economic recovery has been tempered by more global cases of the coronavirus, including an outbreak in Beijing and a rising tide of infections in U.S. states that are reopening their economies. cases hit a record level in Oklahoma just days before President Donald Trump's expected campaign rally in Tulsa. Treasury yields and crude prices fell on these concerns but also drew support from stimulus measures and positive tests of a drug trial for dexamethasone, a cheap and widely used steroid that could save some critically ill COVID-19 patients.
The dollar mostly rose as investors wary of wider geopolitical risks sought its relative safety as Federal Reserve Chair Jerome Powell testified for a second day before Congress.
The Fed will use its "full range of tools" to cushion households and businesses, Powell told lawmakers, echoing remarks he made on Tuesday that were welcomed by investors. tensions between North and South Korea spurred demand for safe havens, as did clashes between Indian and Chinese troops at a disputed border site. a bit of afterglow from yesterday," said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors in Boston.
But after a 50-day rally in equities from March lows that was the sharpest on record, a period of several months where the market doesn't do much can be expected, Arone said.
"We're seeing that struggle, that tug of war, that friction play out already this month," Arone said. "June hasn't been a straight shot to the moon. That's what you're likely going to see for the balance of the summer, not a bad thing."
European shares closed higher, adding to their best gains in almost a month a day earlier. But the Nikkei .N225 overnight in Tokyo eased 0.5% after posting its biggest daily gain in three months the prior day.
MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.04%, pulled lower as U.S. stocks, which account for more than half the world benchmark's performance, diverged.
The Dow Jones Industrial Average .DJI fell 170.37 points, or 0.65%, to 26,119.61 and the S&P 500 .SPX lost 11.25 points, or 0.36%, to 3,113.49. The Nasdaq Composite .IXIC added 14.67 points, or 0.15%, to 9,910.53.
The pan-European STOXX 600 index .STOXX closed up 0.74% while emerging market stocks rose 0.44%.
Chinese blue chips .CSI300 recovered from an early dip to finish steady despite Beijing's worst resurgence in COVID-19 cases in four months. tension between better economic data and rising COVID-19 cases continues to drive market volatility," said Antoine Bouvet, senior rates strategist at ING in London.
The dollar lost strength as the day's trading closed. The dollar index =USD rose 0.123%, with the euro EUR= down 0.22% to $1.1238. The Japanese yen JPY= strengthened 0.28% versus the greenback at 107.06 per dollar.
Benchmark 10-year notes US10YT=RR fell 2.6 basis points to yield 0.7282%. The 10-year German Bund DE10YT=RR rose 0.7 basis point to yield -0.418. GVD/EUR
Oil prices swung in and out of the red amid an increase in U.S. crude inventories.
U.S. crude CLc1 fell 42 cents to settle at $37.96 a barrel, while Brent LCOc1 settled down 25 cents at $40.71.
Gold prices were little changed, buoyed by concerns over a second coronavirus wave and expectations for low interest rates in the near term. But a firm dollar put a lid on gains.
U.S. gold futures GCcv1 settled slightly down at $1,735.60 an ounce.
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