GLOBAL MARKETS-Relief over Poland missile dents dollar flows; stocks retreat
By Amanda Cooper
LONDON, Nov 16 (Reuters) - Global stocks eased from two-month highs on Wednesday while the safe-haven dollar fell, after said a missile that hit his country was probably a stray Ukrainian defence projectile, dispelling fears that it originated from Russia.
Initial relief was enough to encourage some flows back into equities and commodities, but given the big gains of the last couple of weeks, investors took the as an opportunity to book some profits, least given the vulnerability of the economic backdrop in Europe and China in particular.
"It is the worst when we hear such , even if it's from Russia, this still causes uncertainty in the markets and the European market is especially fragile heading to a confirmed recession year due to the energy crisis and geopolitical tensions," Raed Alkhedr, chief market analyst at Equiti.com, said.
In Europe, shares slipped, with the STOXX 600 .STOXX off 0.7%, down from Tuesday's two-month peak, depressed by the auto sector after a report that Germany's Mercedes Benz MBGn.DE cut its
as sales lagged.
Germany's DAX .GDAXI dropped 1.1% while Britain's FTSE 100 .FTSE eased 0.1%
The MSCI All-World index .MIWD00000PUS was virtually unchanged on the day, having fallen by as much as 0.2% overnight when of the explosion in Poland, which killed two people, broke.
When the missile struck, NATO member Poland first said a Russian-made rocket was responsible and summoned Russia's ambassador to Warsaw for an explanation after Moscow denied it was responsible.
The dollar, which acts a safe haven in times of geopolitical or market turmoil, rallied as much as 0.7% overnight, before tracking lower in European trading. It was down 0.4% against a basket of major currencies =USD.
"The initial reaction was understandable given that any deliberate strike on a NATO member would mark an enormous escalatory step," Deutsche Bank strategist Jim Reid said.
"It soon became apparent that this was highly unlikely to be a direct attack."
U.S. stock futures gave back earlier gains, with S&P 500 e-minis ESc1 down 0.1% and Nasdaq 100 futures NQc1 down 0.2%.
The euro EUR=EBS, which hit its highest since early July this week, was up 0.7% on the day at $1.0418, while sterling GBP=D3 was up 0.2% at $1.1895 after UK data showed consumer inflation picked up by a lot more than expected in October.
With political tensions injecting some volatility into markets, benchmark 10-year Treasury yields US10YT=RR fell 2 basis points to 3.777%, their lowest in a month.US/
Gold GCc1 rose 0.2% on the day to $1,776 an ounce, buoyed by a weaker dollar, while Brent crude futures LCOc1 was steady at $93.85 a barrel, having retreated from an overnight high of $94.79. GOL/ O/R
(Additional reporting by Shreyashi Sanyal in Bengaluru, Ankur Banerjee in Singapore and Xie Yu; Editing by Edwina Gibbs, Edmund Klamann, Simon Cameron-Moore and John Stonestreet)
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