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* European stocks fall 1%, world shares set to end winning streak
* A$ falls as Melbourne reintroduces some lockdown measures
* Commodities weaker overall, but copper at five-month high
* U.S. dollar regains traction in FX markets
By Herbert Lash
NEW YORK, July 7 (Reuters) - Investor caution over renewed coronavirus lockdowns snuffed out a five-day rally in most world equity markets on Tuesday and weighed on oil prices, though it was not enough to halt a hot streak in Chinese stocks.
The dollar edged higher as risk currencies such as the Australian dollar took a breather from recent gains and gold dipped as investors booked profits after bullion rallied to a near eight-year peak, trading around $1,780 an ounce.
Equity bourses in London, Paris and Frankfurt fell 1% or more, while stocks fell far less on Wall Street, with the Nasdaq trading flat to slightly higher.
U.S. Treasury yields ticked lower as a rising COVID-19 caseload raised concerns about economic reopening plans. The greater Miami area in Florida became the latest U.S. coronavirus hot spot to roll back its reopening. Cases surged nationwide by the tens of thousands and the U.S. death toll topped 130,000.
Investors remain concerned about the U.S. economic outlook, said Jim Barnes, director of fixed income for Bryn Mawr Trust in the Philadelphia suburb of Berwyn.
"Economic conditions still have a long way to go to get back to pre-crisis levels," he said.
MSCI's all-country world index, which tracks shares in 49 nations, fell 1.64 points, or 0.3%, while Europe's broad FTSEurofirst 300 index dropped 0.64%.
On Wall Street, the Dow Jones Industrial Average fell 165.47 points, or 0.63%, to 26,121.56 and the S&P 500 lost 1.98 points, or 0.06%, to 3,177.74. But the Nasdaq Composite added 52.18 points, or 0.5%, to 10,485.83. The Nasdaq set a fresh intraday peak.
Lockdown measures were also reimposed in Melbourne, Australia, confining its nearly 5 million residents to all but essential travel for another six weeks.
"Just when many parts of the world looked to have got to grips with the coronavirus pandemic, many jurisdictions re-imposed lockdowns to contain a surge in new cases," said Luca Paolini, chief strategist at Pictet Asset Management.
Corporate earnings are expected to fall by about 20% percent this year following the deepest recession in more than a century. Pictet expects a 30% to 40% slump.
"But that does not mean equity and corporate bond markets are due a sharp fall," Paolini said, predicting the U.S. Federal Reserve will inject a further $1.3 trillion of stimulus this year and the European Central Bank will add another 1.1 trillion euros ($1.24 trillion).
The euro was last down 0.20% at $1.1285.
The euro zone economy will drop into a deeper recession this year than previously expected and take longer to rebound, the European Commission forecast. Expectations are for a record 8.7% slump and 6.1% recovery in 2021. The commission had forecast in May a 7.7% downturn and a 6.3% rebound in 2021.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.22% to 96.942. The yen was up 0.20% at $107.5700.
Analysts said signals from the Chinese government through a state-sponsored journal on "fostering a healthy bull market", published on Monday, had helped the buying binge in Chinese shares.
Copper prices soared to their highest in more than five months due to strong demand prospects in top consumer China and worries about supplies from Chile, the world's largest producer of the red metal.
Shanghai's blue-chip index was sputtering by the close after adding to its 15% gains over the past week.
Reporting by Herbert Lash, with additional reporting by Ross Kerber in Boston; Editing by Bernadette Baum