Dollar slumps anew, world stock rally stalls

By Lewis Krauskopf

NEW YORK (Reuters) - The U.S. dollar sank to its lowest in more than a year against key world currencies on Friday as investors assessed comments from the European Central Bank and obstacles to U.S. President Donald Trump's domestic agenda, while a global gauge of stocks was poised to snap a 10-session winning streak.

Gains in the yen, gold and U.S. Treasuries pointed to moves into safe-haven assets rather than stocks that are considered riskier. Oil prices sank 2 percent.

The euro built on sharp gains from a day earlier, rising to near two-year highs against the dollar and undermining European stocks, with Germany's DAX (.GDAXI) equity index falling 1.7 percent.

ECB President Mario Draghi said on Thursday financing conditions remained broadly supportive, and that the euro's appreciation had "received some attention." However, he did not cite that as a problem nor did he directly try to talk the currency down.

"The fact that Draghi didn’t necessarily argue too much against the strength of the euro ... certainly gave the green light for individuals to want to own the currency again or actually add to their positions," said Dean Popplewell, chief currency strategist at Oanda in Toronto.

MSCI's gauge of stocks across the globe shed 0.22 percent, falling after 10 days of gains.

U.S. stock indexes traded modestly lower, pulling back from record high levels reached earlier in the week.

The Dow Jones Industrial Average (.DJI) fell 45.46 points, or 0.21 percent, to 21,566.32, the S&P 500 (.SPX) lost 2.78 points, or 0.11 percent, to 2,470.67 and the Nasdaq Composite (.IXIC) dropped 8.93 points, or 0.14 percent, to 6,381.07.

General Electric (GE.N) shares dropped 3.2 percent after the industrial conglomerate's profit report. Visa (V.N) shares gained 1.8 pct after the payments network operator's results, as a big week of corporate earnings came to an end.

“The market is pausing after another stellar run to record high levels, as people take modest profits off the table and cut back on risk just a little bit going into the weekend,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

Next week, investors will be focusing on a meeting of Federal Reserve policymakers, the release of second-quarter economic growth data, as well as another flood of corporate results.

HEADWINDS

In Europe, the pan-European FTSEurofirst 300 index (.FTEU3) lost 1.10 percent.

"FX strength is set to weigh on euro earners’ results, which will likely contribute to subdued beat ratios for the remainder of the season," said Deutsche Bank equity strategist Wolf von Rotberg.