(Recasts with U.S. stock futures, split on vote impact)
* Republicans postpone bill after failing to find votes
* Bill seen as litmus test of Trump on legislation
* But failure might also shift agenda straight to tax reform
* Stock markets head for worst week since early November
* Dollar inches down, Wall St set to open higher
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, March 24 All eyes in financial markets
were fixed on stuttering Republican efforts to pass a
replacement for Obamacare on Friday, the result of the vote and
Donald Trump's response seen as crucial to his promise to
deliver a "phenomenal" tax reform.
Tuesday's first 1 percent daily fall on Wall Street since
October has put world stocks on course for their worst week
since before Trump's election in November, although many
analysts continue to cast the decline as simply a consolidation
after months of gains.
The White House's ability to get legislation through
Congress is crucial to "Trumpflation" bets on fiscal stimulus,
tax cuts and capital repatriation that markets late last year
assumed would drive inflation and growth higher.
But a number of analysts were also arguing on Friday that
Trump's threat to walk away from the reform if it is not passed
meant its failure might have the net effect of speeding his
efforts to cut U.S. corporate tax rates.
Europe's major stock markets were all lower in midday trade
and the dollar dropped back into negative territory
against the euro, but the gains were minimal and Wall Street was
set to open higher.
"Markets are in wait-and-see mode," said Craig Erlam, a
market analyst with retail broker Oanda in London.
"(But) there is an underlying sense of optimism after Donald
Trump...declared Congress should accept the changes or live with
Obamacare, paving the way for government to refocus its
attention on tax reform."
Stocks and the euro also took some heart from purchasing
manager surveys in France and Germany, both far stronger than
forecast and again pointing to a European economy finally
emerging from years of crisis and stagnation.
By 1230 GMT, the euro was up 0.2 percent at $1.0820
, helping push the dollar around 0.1 percent lower
against the basket of currencies used to measure its broader
The MSCI world equity index, which tracks
shares in 46 countries, was flat at 447.61.
"There is still a risk that the vote fails today, (and)
there are numerous other uncertainties that suggest anything but
a smooth course ahead for implementing the much anticipated tax
reform reflation programme," said Derek Halpenny, head of
European global market research with Japanese group MUFG in
"We still expect a much smaller tax cutting programme simply
due to the inability to agree on how a large program could be
financed. The Trump reflation trade could still reverse course
in a more meaningful way, resulting in dollar weakness."
The dollar did recover some ground against the yen after
U.S. Treasury yields inched higher in Asian time, halting an
eight-day losing streak that is the currency's worst since the
end of 2010.
Bank of Japan Governor Haruhiko Kuroda told a Reuters event
on Friday that there was "no reason" to raise the bank's bond
yield targets now with inflation so far from its 2 percent
A sell-off in a number of commodities markets has also been
a factor in the weakness of stock markets this week. Iron ore
prices fell for a fourth day on Friday and are on course for
their worst week since December.
Oil prices also inched higher, supported by a fall in Saudi
exports to the United States, but remained under pressure from a
glut of supply that OPEC curbs has broadly failed to stem.
Thomson Reuters data shows OPEC shipments to Asia, the
world's biggest and fastest-growing oil-consuming region, are up
more than 5 percent since January, suggesting the group of
producers is shielding its main customers from the reductions.
Unless OPEC extends the curbs beyond June or makes bigger
cuts, traders say oil prices are at risk of falling further.
"OPEC's goal of drawing down inventories to normal levels is
not going to be reached before their agreement expires on June
30," said U.S. investment bank Jefferies in a note to clients.
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Toby Chopra)