GLOBAL MARKETS-High-flying euro lays European shares low as oil picks up

* Euro hits 23-month high vs dollar, dips after German PMI

* Oil rallies as Saudi Arabia vows to cap exports

* Weak dollar, political ructions, push gold to 4-week high

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

LONDON, July 24 (Reuters) - The euro hit an almost two-year high against an ailing dollar on Monday, largely shrugging off data showing euro zone business growth slowed last month and weighing on exporters' shares.

Strength in the euro, which helped pitch the dollar to a 13-month low against a basket of major currencies, depressed European automakers, other sectors and major stock indexes, while Wall Street was also indicated lower .

The euro touched $1.1684 in Asian trade, before pulling back to trade at $1.1648, down 0.2 percent on the day.

The European single currency hit a low for the day of $1.1631 after preliminary data showing German private sector growth slowed more than expected in July.

The euro has risen in recent weeks on expectations the European Central Bank will begin to scale back its bond-buying monetary stimulus scheme before long.

On Friday, the day after an ECB policy meeting, four sources with direct knowledge of the discussions said policymakers saw October as the most likely date to decide on this.

European shares fell on Monday, with the exporter-dominated German DAX index dropping 0.5 percent, slightly underperforming the pan-European STOXX 600 index, which lost 0.4 percent. The STOXX index dropped 1 percent on Friday as the strong euro weighed on earnings.

German government bond yields edged lower after euro zone business activity data also came in below forecasts.

The 10-year yield - the benchmark for euro zone borrowing costs - fell to 0.49 percent, down 0.4 basis points and its lowest in more than a week. It later nudged back up to 0.5 percent.


The dollar index was last up 0.1 percent on the day.

"A weaker dollar seems to be the path of least resistance given the soft data coming out of the U.S. and the political uncertainty," Michael Hewson, chief markets strategist at CMC Capital Markets in London, said.

Investigations into alleged Russian meddling in last year's U.S. presidential election are seen as potential impediments to President Donald Trump implementing his economic agenda.

Speculative investors turned negative on the dollar last week for the first time in more than a year, data from the Commodity Futures Trading Commission showed on Friday.

On Monday, MSCI's broadest index of Asia-Pacific shares outside Japan reversed losses to edge up 0.3 percent.

But Japan's Nikkei dropped 0.6 percent, pressured by a stronger yen. Australian shares retreated 0.7 percent and South Korea's KOSPI edged down 0.1 percent.

Chinese bluechips closed up 0.4 percent and close to 18-month highs as institutional investors stepped up purchases of big companies' shares.

Oil reversed earlier falls after leading OPEC producer Saudi Arabia pledged to limit exports next month, with Brent crude, the international benchmark, up 43 cents at $48.49 a barrel.

Ministers from the Organization of the Petroleum Exporting Countries and other non-OPEC producers will meet in St Petersburg to review market conditions and examine any proposals related to their pact to cut output.

Sources familiar with the talks said the meeting may recommend a conditional cap on production from Nigeria and Libya - two OPEC members so far exempt from cuts - although some analysts were sceptical of such a move.

The weaker dollar helped push copper close to its highest since March, 0.4 percent higher on the day at $6,025 a tonne.

Gold hit its highest in four weeks and stood at $1,256 an ounce, up 0.1 percent on the day.

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s (Additional reporting by Nichola Saminather in Singapore, Saikat Chatterjee, Amanda Cooper and Dhara Ranasinghe in London; editing by John Stonestreet and Alexander Smith)