GLOBAL MARKETS-Dollar stronger on Fed bets, stocks edge down
* U.S. Treasuries little changed, some T-bill yields negative
* U.S. dollar above 100 yen, euro weakens
* Oil extends recovery on supply disruption concern
(Updates prices, comment) NEW YORK, July 2 (Reuters) - The U.S. dollar hit its highest in a month against the yen on Tuesday while a gauge of global equities turned negative as U.S stocks reversed course and edged lower. Wall Street lost its early gains, weighed by declines in shares in the industrial and technology sectors as the S&P 500 once again lost steam after it bumped against its 50-day moving average. "We have been seeing this pattern where the market starts off with strength in the morning session but drifts a little lower with some selling in the afternoon," said Ryan Detrick, analyst at Schaeffer's Investment Research. "Volume is light today so that is exaggerating the move, but it's a bit of profit-taking, nothing major." Trading will likely be thin all week, with U.S. markets closing early on Wednesday and all of Thursday for the U.S. Independence Day holiday. The lower volume could translate into increased volatility, especially with the release of the U.S. non-farm payroll report on Friday. The Dow Jones industrial average was down 72.79 points, or 0.49 percent, at 14,902.17. The Standard & Poor's 500 Index was down 5.15 points, or 0.32 percent, at 1,609.81. The Nasdaq Composite Index was down 13.20 points, or 0.38 percent, at 3,421.29. In Europe, the broad FTSEurofirst 300 index closed 0.4 percent lower, weighed by a near 9 percent drop in Fresenius Medical Care after the U.S. agency in charge of state-run health schemes proposed bigger-than-expected cuts to reimbursements for dialysis providers.
GREENBACK GAINS The dollar hit a one-month high against the yen at 100.72 and rose to a near five-week peak against a basket of currencies on expectations Friday's U.S. jobs data will bolster the chances that the Fed will scale back its stimulus measures sooner than expected. Comments from Fed officials have recently turned markets on their heads as traders try to guess how soon the central bank will start to wind down its $85 billion monthly bond purchases. This program, known as quantitative easing, has been instrumental for the rally in stocks and has helped keep interest rates near historic lows, while putting downward pressure on the greenback. "There's still a bias overall for a stronger dollar because of tapering expectations," said Brian Kim, currency strategist at RBS Securities in Stamford, Connecticut. "Although some Federal Reserve officials have tried to temper these expectations, the market view is that tapering will come sooner, rather than later." The head of the Federal Reserve Bank of New York reiterated in a speech on Tuesday that the U.S. central bank will likely continue to support the economic recovery for some time despite market worries that it would pull back soon. The yen's weakness helped Japan's Nikkei index to close 1.8 percent higher, above 14,000 for the first time in five weeks, as shares of blue-chip exporters rose. The euro fell 0.5 percent to $1.3001 and hit a low of $1.2989, near last week's trough of $1.2983, which was its lowest since early June. Prices of U.S. Treasuries traded little changed as investors paused before the U.S. holiday and labor market data. "The market's in a bit of a holding pattern as we await Friday's employment report," said Ian Lyngen, senior government bond strategist at CRT Capital Group in Stamford, Connecticut. The benchmark 10-year Treasury note was up 1/32 in price to yield 2.4711 percent. Interest rates on some Treasury bills turned negative as investors scrambled for cash-like assets to guard against volatile trading that could come from Friday's jobs data. With Greece due to repay 2.2 billion euros of bonds in August, yields on 10-year Greek bonds were up 14 basis points at 11.18 percent. Portugal's bond yields widened 22 basis points to 6.62 percent after the finance minister quit. In commodities trading, Brent crude rose near $104 a barrel , extending gains to a second day due to concerns about supply disruptions in the Middle East and Africa. U.S. crude was up 1.6 percent to $99.58. Copper fell from a near two-week high in the previous session as a stronger dollar weighed on the price and investors remained concerned about economic prospects in top metals consumer China. Three-month copper traded down 0.7 percent to $6,928, partly reversing the previous session's 3.4 percent rally.
(Additional reporting by Richard Hubbard, Gertrude Chavez-Dreyfuss, Luciana Lopez, Richard Leong and Alison Griswold; Editing by Dan Grebler)