GLOBAL MARKETS-Shares, debt trade near break-even before Fed minutes
* Focus on Fed's June meeting minutes, Bernanke to speak
* Dollar off three-year high, euro stabilizes after hitting three-month low
* Oil rises on U.S. demand revival hopes
NEW YORK, July 10 (Reuters) - Global equity markets and government debt traded near break-even on Wednesday as investors awaited minutes from the Federal Reserve's June policy meeting for clues on when it will begin to slow its stimulative bond-buying program and by how much. Weak data from China and a rating downgrade of Italy curbed investors' enthusiasm for equities pending the release of minutes from the Fed's June 18-19 meeting. After a five-day run of gains for world shares and the dollar's surge to a three-year high, investors were booking profits and squaring positions. Many equity markets were trading slightly lower, though U.S. stocks were initially higher on the notion that either the minutes, or Fed Chairman Ben Bernanke - due to speak after the close of regular Wall Street trading - might suggest that the Fed may not begin to scale back its stimulus measures in September, as a market consensus has indicated. The minutes from the policy-setting Federal Open Market Committee meeting will be released at 2 p.m. (1800 GMT). "The only surprise you could have is a positive one because everyone's expecting tapering (of Fed bond purchases) so if the minutes were a little bit more dovish than markets expected it could even be a positive," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets. MSCI's all-country world equity index was up 0.22 percent, helped by a late rally in Chinese shares that was sparked by talk of policy easing to combat slowing growth there. The Dow Jones industrial average was down 36.39 points, or 0.24 percent, at 15,263.95. The Standard & Poor's 500 Index was down 3.98 points, or 0.24 percent, at 1,648.34. The Nasdaq Composite Index was up 0.62 points, or 0.02 percent, at 3,504.89. The broad FTSEurofirst 300 index of leading regional European companies had initially gained but soon buckled as data showing China's exports fell for the first time in 17 months was followed by soft manufacturing figures from France, the Netherlands and Greece. The index closed down 0.04 percent at 1,188.49. China warned of a "grim" outlook for trade after data showed exports fell 3.1 percent in June, confounding forecasts for a 4 percent rise. However, the data fueled talk that China's central bank may ease policy in an effort to boost growth.
The euro's gains against the dollar accelerated in early New York trade to reach a session high after the release of limp U.S. data. U.S. wholesale inventories fell in May by the most in over a year and a half, the second straight monthly decline and a sign that restocking by businesses could weigh against economic growth in the second quarter. The euro rose as high as $1.2861 and was last trading at 1.2848, up 0.53 percent on the day. The benchmark 10-year U.S. Treasury note was down 5/32 in price to yield 2.6588 percent. German Bund futures reversed gains, tracking weakness in U.S. Treasuries before a $21 billion auction of 10-year U.S. notes and the Fed minutes. Bund futures fell as low as 142.41, 15 ticks lower on the day, having traded as high as 142.87 earlier. Bunds were last two ticks lower at 142.54. Oil rose on both sides of the Atlantic, with the U.S. benchmark climbing to a 14-month high above $105 a barrel, buoyed by a sharp decline in fuel stockpiles in the United States, the top oil consumer. But worries about a sluggish Chinese economy, underlined by the bleak June trade data, kept a lid on gains. U.S. crude rose $2.04 to $105.57 a barrel. Brent gained 46 cents to trade at $108.27.