GLOBAL MARKETS-G20's protectionism shift hits stocks, dollar at 6-week low


* G20 drops pledge to resist all forms of protectionism
    * Deutsche Bank weighs on European stocks
    * Currency markets eye flurry of Fed speeches this week

    By Jamie McGeeverLONDON, March 20 (Reuters) - World markets baulked on Monday
at the G20's decision to drop a decade-old pledge to resist
trade protectionism, with stocks, the dollar, oil and the price
of many major sovereign bonds all sliding into the red.
    Investor scepticism over how much the U.S. Federal Reserve
will be able to raise rates weighed on the dollar too, although
with the exception of gold, the greenback's weakness failed to
give a fillip to commodities, as is often the case.
    European stocks fell as much as 0.3 percent and U.S. futures
pointed to a fall of around 0.2 percent at the open on Wall
    Banks were among the biggest decliners in Europe, dragged
down by a 3 percent fall in Deutsche Bank shares <.DBKGn.DE> one
day before the start of Germany's biggest lender's 8
billion-euro cash call.
    "European equity markets have started the week with a heavy
risk-off sentiment after the G20 communique explicitly reflected
U.S. intentions to establish trade protectionist measures," said
Ipek Ozkardeskaya, senior market analyst at London Capital
    "As the world's number one economy is preparing to set
significant barriers against the world, investors are
increasingly worried," she said.
    Financial leaders of the world's biggest economies dropped a
pledge to keep global trade free and open, acquiescing to an
increasingly protectionist United States after a two-day meeting
failed to yield a compromise.
    Breaking a decade-long tradition of endorsing open trade,
G20 finance ministers and central bankers made only a token
reference to trade in their communiques on Saturday.
    The FTSEuroFirst index of leading 300 European shares fell
0.2 percent to 1,489 points <.FTEU3>, Britain's FTSE 100 <.FTSE>
fell 0.2 percent and Germany's DAX <.GDAXI> fell 0.3 percent.
    MSCI's broadest index of Asia-Pacific shares outside Japan
<.MIAPJ0000PUS> rose almost 0.4 percent to hit its highest level
in more than two years on Monday. As a result, MSCI's global
benchmark equity index was little changed <.MIWD00000PUS>.
    On Friday, Wall Street was flat to negative, dragged lower
by bank shares that slid along with Treasury yields.
    The 10-year U.S. Treasury yield has fallen since the Fed
raised rates last week for only the third time in over a decade.
It edged up a basis point on Monday 20 2.51 percent <US10YT=RR>.
    The gap between two- and 10-year yields has shrunk recently,
meaning the yield curve has flattened. This suggests investors
are sceptical that growth and inflation will be strong enough to
warrant a sustained cycle of rate hikes, and this has
subsequently weighed on the dollar.
    After raising rates last week, the Fed reiterated plans for
a total of three rate hikes this year, fewer than the four
markets were expecting.

    G20 financial officials reiterated their warnings against
competitive devaluations and disorderly currency markets. The
dollar didn't show much reaction, taking its cue instead from
the moves in U.S. yields.
    Currency markets are also focused on a raft of speeches by
Fed officials this week, including Chicago'sCharles Evans on
Tuesday and Friday, Chair Janet Yellen on Thursday, Dallas'sRobert Kaplan and Minneapolis's Neel Kashkari on Friday and New
York'sWilliam Dudley on Saturday.
    "Sentiment towards the dollar has deteriorated
significantly," Societe Generale FX analysts said in a note to
clients on Monday.
    The dollar index of its value against a basket of six
currencies hit a six-week low of 100.02 on Monday before
recovering most of its losses. A fourth straight lower close on
Monday would mark its longest losing streak since November.
    The dollar inched up 0.1 percent against the yen to 112.85
yen <JPY=D4>, while the euro rose 0.2 percent to $1.0760 <EUR=>.
    Citi became the latest major bank to abandon its headline
forecast for a fall in the euro to below parity with the dollar,
upping its prediction for the single currency over the next six
to 12 months to $1.04 from $0.98 previously.
    Attention now turns to the French election, with the first
presidential debate set to take place on Monday. Opinion polls
show independent centrist Emmanuel Macron would lead far-right
leader Marine Le Pen by a hair in first-round voting, before
beating her handily in the run-off. [nL5N1GW0LL]
    In commodities, oil prices continued their downward trend as
OPEC supplies remained steady despite touted cuts, and rising
U.S. drilling contributed to concerns about a supply glut.
    U.S. crude <CLc1> dropped 1.4 percent to $48.09 a barrel.
    Global benchmark Brent <LCOc1> fell 1 percent to $51.25.
    The weaker dollar boosted gold <XAU=>, which rose 0.2
percent at $1,231 an ounce.

Shanghai CSI 300 and global effects interactive
Chinese A-shares vs developed and emerging stocks
 (Reporting by Jamie McGeever; Editing by Mark Heinrich)
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