* Investors worry Trump may take protectionist steps with Xi
* European stocks touch 16-month high, then ease
* Generally upbeat manufacturing data supports dollar
* Oil prices under pressure on Libyan output recovery
(Adds U.S. market open, byline, dateline; previous LONDON)
By Herbert Lash
NEW YORK, April 3 Global equity markets eased on
Monday as investors awaited the first meeting later this week
between U.S. President Donald Trump and Chinese President Xi
Jinping, as the dollar gained amid a positive U.S. backdrop of
rising interest rates.
European shares touched a 16-month high before
paring gains as they tracked Asian shares higher in the wake of
upbeat manufacturing data out of Europe and China.
Shares on Wall Street fell in morning trading as investors
assessed how Trump's protectionist stance on trade will play out
during meetings with Xi slated for Thursday and Friday.
Trump held out the possibility, in an interview published on
Sunday by the Financial Times, of using trade as a lever to
secure Chinese cooperation against North Korea.
"The market will be anxious and will be eager to glean
whatever they get from those talks," said Andre Bakhos, managing
director at Janlyn Capital in Bernardsville, New Jersey.
"The market was a little taken aback by Trump's comments
recently about the meeting," he said.
The pan-European FTSEurofirst 300 index lost 0.49
percent, shedding earlier gains, and MSCI's gauge of stocks
across the globe shed 0.39 percent.
German manufacturing growth hit almost a six-year high in
March, Markit's Purchasing Managers' Index (PMI) showed.
Manufacturing activity in France and Italy also rose, adding to
signs of a pickup in the global economy.
On Wall Street, the Dow Jones Industrial Average fell
79.12 points, or 0.38 percent, to 20,584.1. The S&P 500
lost 11.29 points, or 0.48 percent, to 2,351.43 and the Nasdaq
Composite dropped 27.46 points, or 0.46 percent, to
The dollar rose amid investor expectations U.S. rates will
continue to rise this year, even as Federal Reserve officials
have said the Fed is in no rush to tighten monetary policy.
"U.S. fundamentals remain solid, may improve further still,
if the president can make some quick progress on tax reform,"
said Shaun Osborne, chief FX strategist at Scotiabank in
U.S. construction spending and manufacturing data were
positive overall, affirming the economy's steady improvement and
helping lift the dollar. Construction spending grew 0.8 percent
to $1.19 trillion, the highest since April 2006.
The dollar index rose 0.31 percent, with the euro
unchanged at $1.0649.
The Japanese yen strengthened 0.34 percent versus the
greenback at 111.01 per dollar, while sterling was last
trading at $1.247, down 0.60 percent on the day.
Oil prices were under pressure as a rebound in Libyan oil
output over the weekend offset upbeat economic data from Asia
that suggested robust energy demand from the region.
Benchmark Brent futures eased by 8 cents to $53.45 a
barrel. U.S. West Texas Intermediate crude futures were
down 10 cents at $50.50 a barrel.
Manufacturing data showed factories across much of Asia
posted another month of solid growth in March.
The Bank of Japan's "tankan" survey showed business
sentiment improved, albeit slightly less than expected.
Benchmark 10-year notes last rose 16/32 in price
to yield 2.339 percent.
(Additional reporting by Yashaswini Swamynathan; Editing by