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GLOBAL MARKETS-Wall Street heads for steady open, Intel a bright spot

* Dollar hits four-month highs

* Oil bounces nearly 3%

* Ifo cuts German growth forecast for 2021

* Wall Street set for steadier start after Tuesday tumble

* Intel shines on investment news

* Buy a car with bitcoin, says Tesla

LONDON, March 24 (Reuters) - Wall Street headed for a firmer open on Wednesday, with Intel a bright spot amid investor worry that global recovery from COVID-19 will be patchier as parts of Europe enter fresh lockdowns in a year-long pandemic.

The dollar hit a four-month high, supported by a weaker appetite for shares in Asia and Europe. Yields eased and oil bounced.

“We are definitely in that mode of a potential further reduction in risk, which would be supportive for the dollar,” said Derek Halpenny, head of research for global markets at MUFG.

“If you were to pick a top concern, then it would be the COVID situation, with new cases in emerging markets back to record highs and what’s happening in Europe. It does not tally with global optimism for synchronised global growth,” Halpenny added.

U.S. stock futures pointed to a steadier start on Wall Street after Tuesday’s tumble. Dow E-minis, S&P 500 E-minis and Nasdaq 100 E-minis advanced by 0.4% to 0.7%.

Intel shares jumped about 5.7% as the chipmaker announced plans to spend as much as $20 billion to build two factories in Arizona and open its factories to outside customers, sending shares in rivals higher.

Bitcoin gained nearly 5% as Tesla Inc chief Elon Musk said the company’s electric vehicles can now be bought using bitcoin.

Wall Street will scrutinise IHS Markit’s flash reading, which is likely to show business activity in the manufacturing and services sectors improved in March from the prior month.

Benchmark 10-year U.S. Treasury notes last yielded 1.6278%, slightly lower after reaching 14-month highs last week.

COVID’S ECONOMIC SHADOW

European shares hit a two-week low before the pan-European STOXX index of leading companies recovered some lost ground, down 0.19%. Travel stocks were among the biggest fallers on the prospect of holidays abroad remaining a dream for now.

Paris, Frankfurt and London were all weaker.

“The mood is fairly fragile as all the optimism that characterised the push higher over the past two or three weeks in shares is starting to bleed away on talk of a European third wave and extensions of pandemic lockdowns in Germany and France,” said Michael Hewson, chief market analyst at CMC Markets.

The Ifo Institute said Germany’s extended lockdown is delaying recovery. It cut its 2021 growth forecast for Europe’s biggest economy to 3.7% from 4.2% previously.

The IHS Markit euro zone flash composite purchasing management index rose to 52.5 in March from 48.8 in February in a surprise return to growth this month, as factories ramped up production at its fastest pace in over 23 years.

But the April numbers could be hit by the gathering pace of COVID infections across Europe.

Wall Street tumbled on Tuesday on concerns about the cost of infrastructure spending and potential tax hikes to pay for President Joe Biden’s $1.9 trillion relief bill.

Still, the S&P 500 index’s 75% increase from March 2020 troughs represents the biggest rolling 12-month increase in the index since 1936, Deutsche Bank noted.

U.S. Treasury Secretary Janet Yellen said on Tuesday the U.S. economy remains in crisis from the pandemic as she defended developing plans for future tax increases to pay for the new public investments.

Federal Reserve Chair Jerome Powell told U.S. lawmakers that a coming round of post-pandemic price increases will not fuel a destructive breakout of persistent inflation. He meets with U.S. lawmakers again on Wednesday.

Asian shares skidded to a two-week trough overnight and the dollar neared four-month highs.

MSCI’s broadest index of Asia-Pacific shares outside of Japan fell 1.1% to 675.81 points.

In currencies, the dollar index hit a four-month high of 92.608 against a basket of most major currencies. The euro edged down 0.16% to $1.831.

Oil bounced 2% from heavy losses overnight, helped by news of a ship running aground in the Suez Canal, though traffic was expected to resume soon.

Brent crude futures rose 2.8% to $62.47 a barrel, after tumbling 5.9% to a low of $60.50 on Tuesday. West Texas Intermediate crude futures added 2.7% to $59.37, having lost 6.2% the previous day.

Safe-haven gold was higher at $1,731.9 an ounce. (Reporting by Huw Jones in London, Swati Pandey in Sydney and Chris Prentice in Washington; editing by Stephen Coates, Lincoln Feast, Larry King)

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