By Georgi Kantchev 

Global stocks inched higher and the dollar fell Tuesday, as investors parsed the latest signals in the trade spat between the U.S. and China and President Trump's comments about the Federal Reserve.

The Stoxx Europe 600 was up 0.1% in early morning trade. Most Asian markets were higher while futures pointed to a broadly flat opening for the S&P 500.

The dollar fell against other major currencies after Mr. Trump criticized the Federal Reserve for raising interest rates.

The Trump administration is moving closer this week to levying tariffs on $200 billion of Chinese goods, or nearly half of Chinese imports, despite the start of a fresh round of talks between the two countries to settle the trade dispute. The U.S. is considering tariffs of either 10% or 25% on thousands of categories of products.

The moves exacerbate concerns among investors that the world's two biggest economies could descend further into a trade fight. Rising frictions in international trade this year have rocked global markets, adding to one of their most volatile stretches in years.

"Trade has been and continues to be a cap on the market," said Lindsey Bell, investment strategist at CFRA Research. "Potential talks are positive but if they don't lead to resolutions, that's a big risk for the market."

Still, the U.S. stock market has been resilient, with the S&P 500 just 0.6% off its all time high, amid strong corporate earnings and solid economic data.

"The economy looks good and consumers feel confident, which is supporting the market," Ms. Bell said.

The dollar, meanwhile, was under pressure after Mr. Trump said in a Reuters interview that he was "not thrilled" with Fed Chairman Jerome Powell and said he expected "more help" from the central bank.

Analysts said the impact of Trump's comments is unclear.

"Given that the Fed is an independent institution, explicit comments about interest rates may have the opposite effect as policy makers led by Powell could be more inclined to tighten monetary policy to defend their credibility," strategists at Rabobank wrote in a note to clients.

The Fed has raised interest rates twice this year and has penciled in two more quarter-point interest-rate increases in 2018 and three more in 2019. Higher rates tend to boost the dollar by making the currency more appealing to yield-seeking investors.

Later this week, investors will be watching for minutes from the Fed's August meeting as well as the annual Jackson Hole symposium of global central banks.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.2%. The 10-year U.S. Treasury yield rose to 2.833%, compared with 2.823% on Monday. Yields move inversely to prices.

Investors continued to monitor developments in Turkey, where the lira's swift falls in recent weeks have sparked concerns about broader emerging markets contagion. The currency was down 0.4% against the dollar on Tuesday.

In Asia, Japan's Nikkei Stock Average finished up 0.1% while Hong Kong's Hang Seng was up 0.5%

In commodities, Brent crude, the global oil price benchmark, was up 0.2% while gold was up 0.5%.

Write to Georgi Kantchev at georgi.kantchev@wsj.com

 

(END) Dow Jones Newswires

August 21, 2018 04:39 ET (08:39 GMT)

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