June 10, 2020 / 3:21 PM / 25 days ago

GLOBAL MARKETS-Dollar slips, stocks fall ahead of Fed meeting

(Adds U.S. market open, byline, changes dateline; previous LONDON)

* Stocks edge down, caution ahead of Fed

* Dollar index touches new three-month lows

* Oil tumbles on rising U.S. inventories

By Herbert Lash

NEW YORK, June 10 (Reuters) - The dollar slid to a three-month low and a gauge of global equities edged lower on Wednesday as investors awaited news at the end of a two-day meeting of the Federal Reserve and its plans to strengthen a nascent U.S. economic recovery.

The technology-centric Nasdaq hit a new high and Asian equities extended a streak overnight, but stocks were mostly subdued even as the Fed is likely to emphasize its promise of loose monetary policy for perhaps years to come.

U.S. Treasury yields fell on expectations the Fed will signal its intention to keep interest rates near zero for the next few years as it attempts to revive a U.S. economy now officially in recession since February.

MSCI's gauge of stocks across the globe shed 0.14% while the pan-European STOXX 600 index lost 0.52%.

Hank Smith, co-chief investment officer at Haverford Trust, said the firm is bullish intermediate to long-term as the Fed will be accommodative for several years, but he acknowledged a "breather" is due for stocks.

"A pullback would be healthy and one cannot rule out a correction, given the magnitude of this advance," Smith said in a note.

On Wall Street, the Dow Jones Industrial Average fell 227.39 points, or 0.83%, to 27,044.91. The S&P 500 lost 12.54 points, or 0.39%, to 3,194.64 and the Nasdaq Composite added 50.95 points, or 0.51%, to 10,004.70.

Demand remains subdued as seen in U.S. consumer prices, which fell for a third straight month in May, with underlying inflation weak. The consumer price index dipped 0.1% last month after plunging 0.8% in April, the largest decline since December 2008.

But copper prices rose for a fifth straight session to their highest since January as the metal, which is widely used in the construction and power industries, has been supported by firm demand and an improved technical picture.

Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $5,822 per tonne in official trading.

Oil fell more than 2% toward $40 a barrel after a report showed a rise in U.S. crude inventories, reviving concerns about oversupply and weak demand because of the coronavirus crisis.

The American Petroleum Institute said crude stocks rose by 8.4 million barrels, rather than falling as analysts forecast. The U.S. government's official stocks figures are due out later on Wednesday.

U.S. crude recently fell 1.8% to $38.24 per barrel and Brent was at $40.63, down 1.34% on the day.

The dollar slid on increased speculation the Fed will announce at 2 p.m. that it intends to keep the recent rise in bond yields in check.

The dollar index fell 0.283%, with the euro up 0.19% to $1.1362. The Japanese yen strengthened 0.41% versus the greenback at 107.31 per dollar.

Some investors believe the Fed may decide now or at a later date to adopt yield-curve control measures to guide 10-year Treasury yields lower.

Benchmark 10-year notes fell 4.3 basis points to yield 0.7856%.

MSCI's broadest index of Asia-Pacific shares outside Japan advanced 0.66% for its 10th straight session of gains.

Data showing the sharpest slump in China's producer prices in four years - pointing to flagging global demand - served as a reminder of the impact the coronavirus pandemic is having on the global economy.

So did the latest outlook from the Organization for Economic Cooperation and Development (OECD), which said the global economy will suffer the biggest peacetime downturn in a century before it emerges next year from recession.

Reporting by Dhara Ranasinghe; Additional reporting by Tom Westbrook in Singapore; Editing by Toby Chopra and Jonathan Oatis

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