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By Herbert Lash
NEW YORK (Reuters) - The dollar edged higher while global shares slid on Monday as euro zone equities clocked their worst day in a month after dismal business activity readings in Europe deepened fears of a looming recession there.
Bond yields across the euro area tumbled after German private sector activity shrank for the first time in 6-1/2 years in September as a manufacturing recession worsened and service-sector growth also lost momentum.
Growth also slowed unexpectedly in France, the only other euro zone country for which IHS Markit's flash composite Purchasing Managers' Index is published.
Germany's DAX stock index fell 1% to its biggest one-day fall since Aug. 23. The pan-European STOXX 600 index lost 0.80%.
Copper prices fell to their lowest in 2-1/2 weeks on weak demand prospects, reinforced after U.S.-China trade talks failed to yield a breakthrough last week.
"Trade tensions between the two largest economies in the world are having an impact ... the dreadful manufacturing figures from Germany this morning is a great example of how the problem spills out beyond the U.S. and China," said CMC Markets analyst David Madden in London.
Marc Chandler, chief market strategist at Bannockburn Global Forex LLC said the euro zone flash PMI dashed hope that the worst was past.
The euro zone economy is not showing convincing signs of a rebound and a persistent downturn in manufacturing puts at risk the rest of the economy, European Central Bank President Mario Draghi said.
MSCI's gauge of stocks across the globe shed 0.22% and its emerging markets index lost 0.60%.
U.S. stocks barely budged, with gains in shares of Apple Inc offset by mixed economic data that added to caution over the prolonged U.S.-China trade war. Apple Inc rose 0.46% after U.S. trade regulators approved 10 out of 15 requests for tariff exemptions by the iPhone maker. U.S. employment in the services sector shrank in September for the first time in 9-1/2 years, IHS Markit's PMI showed. At 50.9 it was below expectations of 51.3. But data also showed manufacturing activity rose, topping expectations.
The Dow Jones Industrial Average rose 14.92 points, or 0.06%, to 26,949.99. The S&P 500 lost 0.29 points, or 0.01%, to 2,991.78 and the Nasdaq Composite dropped 5.21 points, or 0.06%, to 8,112.46.
The dollar climbed, buoyant in recent months as its relatively high yield and a strong U.S. economy attracted investors.
The dollar index rose 0.11%, with the euro fell 0.23% to $1.0992. The Japanese yen strengthened 0.12% versus the greenback at 107.46 per dollar.