GLOBAL MARKETS-Shares fall after Fed bounce loses strength

By Tom Arnold

LONDON, Jul 30 (Reuters) – Global stocks fell on Thursday after the Federal Reserve’s promise to use all its tools to support the U.S. economy did not calm investors, worried about the stalemate in the discussion over fiscal support and the increase in cases of coronavirus.

* In Europe, disappointing earnings reports and weaker-than-expected German GDP data soured sentiment and led to a 1.6% drop in the STOXX 600. That erased stock gains during the session in Asia and the MSCI index of Asia Pacific stocks excluding Japan was flat.

* The MSCI global equity index, which tracks markets in 49 countries, was down 0.4%.

* Investors were concerned about an increase in coronavirus cases in the United States, parts of Europe, and Asia. Australia, India, Vietnam and North Korea were on alert.

* On Wednesday, all Fed members voted to keep the short-term interest rate target range between 0% and 0.25%, a level it has been since March 15, when the virus It was beginning to affect the country.

* The decision to maintain the policy and the promise that the Fed would use “all its tools” if necessary strengthened the appetite for risky assets during the session in Asia and led the three main Wall Street indexes to close with gains .

* On Thursday, investors’ attention returned to negotiations on a new coronavirus aid package in the world’s largest economy. United States President Donald Trump said Wednesday that his government and Democrats in Congress are still far from agreeing on new aid.

* In the currency markets, the dollar index was recovering after falling to 93.17, its lowest level since June 2018, but it is on course to mark its worst monthly performance in a decade.

* The dollar has fallen on expectations that the Fed will maintain its ultra-expansive monetary policy for years and on speculation that it will allow inflation to exceed the ranges it has previously indicated before raising interest rates.

* The weakness of the dollar supported the euro, which was aimed at scoring its highest monthly rise in 10 years, after gaining about 5% this month. The block’s currency fell 0.3% to $ 1.1555.

* In the commodity markets, oil prices fell on concerns that the increase in coronavirus infections worldwide would jeopardize the recovery in fuel demand.

* Brent futures were down 1.7% at $ 43.33 per barrel. US crude futures were down 2.1% at $ 40.41.

* Spot gold was down 0.75% at $ 1,955.6 an ounce.

(Report by Tom Arnold in London and Swati Pandey in Sydney; Edited in Spanish by Ricardo Figueroa)