* World stocks fall and dollar rises
* Wall Street set for losses at open
* Gold slips
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 20 (Reuters) - Investors gave up a brief
flirtation with higher stocks and a higher dollar on Friday as
world equities fell and the dollar climbed.
Wall Street looked set to open lower.
In recent months, the U.S. currency and equities have moved
in opposite directions, with the former getting hit every time
risk appetite bolsters the latter and vice versa.
Earlier on Friday, this correlation broke down. But it
proved only temporary as the stronger dollar weakened commodity
prices and stock investors retreated.
"We're still stuck in a tight range, and this could last
until December," said David Thebault, head of quantitative sales
trading at Global Equities in Paris.
Investors are heading towards year-end seeking firm proof
that the global economy is rebounding rather than just not
getting worse. But at the same time there is a strong tendency
to want to lock in profits.
This may be having some effect on the dollar, which has
benefitted from the profit-booking in higher-yielding
currencies.
"Hedge funds are cashing out their positions to prepare for
year-end redemption requests from their clients. And that move
is encouraging others to take profits as well," said the head of
a trading desk at a big Japanese bank.
As a result, the dollar was steady to up 0.6 percent against
a basket of major currencies <.DXY>. The euro slipped nearly
three-quarters of a percent to $1.4809 <EUR=> and Britain's
pound was down 1.2 percent at $1.647 <GBP=>.
The steady dollar did not push gold lower. It was down more
than $8 an ounce at $1,135 an ounce <XAU=>, well off its record
high reached on Wednesday.
Gold tends to rise when the dollar falls because the metal
becomes cheaper to non-dollar investors.
EUROPEAN STOCKS BOUNCE
MSCI's all-country world index (.MIWD00000PUS> was down 0.6
percent adding to a 1.6 percent fall on Thursday. It was heading
for a weekly loss despite hitting a year high on Monday.
European shares turned tail and were heading for a fourth
consecutive day of losses.
The FTSEurofirst 300 <> index of top European shares
was down 1 percent.
Earlier, Japan's Nikkei <> fell 0.5 percent and logged
its first four-week losing streak in over a year.
Demand for euro zone government bonds rose.
(Additional reporting by Dominic Lau and Satomis Noguchi;
Editing by Ron Askew)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge Hub
click on http://blogs.reuters.com/hedgehub)
