London:Stocks faltered and bonds rose on Wednesday as US President Donald Trump’s political position was threatened by the criminal convictions of two former advisers, while the US dollar headed for its sixth straight day of losses. Investors had a lot to digest with the conviction of Trump’s former campaign chairman on eight counts of financial wrongdoing and a guilty plea by his former personal lawyer in separate cases.

US stock futures fell on the news and were trading 0.2% to 0.3% lower at 1240 GMT.

While the immediate market reaction was not dramatic, the developments present further uncertainty over Trump’s leadership for investors to navigate.

US bond yields dropped as investors sought safety in Treasuries. They were trading at 2.8207%, compared with Tuesday’s close of 2.844%.

“Trump has weathered quite a few allegations before this, where many people were quick with the ‘I’ word (impeachment), so we need to see whether this could open a new chapter or if it will calm down again and markets move on," said Commerzbank rates strategist Christoph Rieger.

MSCI’s all-country world stock index was unmoved by the uncertainty, rising 0.3% after the S&P 500 hit a record intra-day high of 2,873.23 points, topping the 2,872.87 set on 26 January.

The index was poised for the longest-running bull market in its history. Its relentless rise highlights the divergence in fortunes between U.S. stocks - turbo-charged by tax cuts and share buybacks - and the rest of the world. Year-on-year earnings growth in the US is expected to be around 24% this year while Europe is forecast to deliver around 9 percent.

European shares edged down 0.1%, trading lower as the market awaited US-China trade talks set to resume under the cloud of Trump’s prediction that they would make no real progress.

“The key point is these are mid-level officials," said Donough Kilmurray, managing director and head of the Investment Strategy Group for EMEA at Goldman Sachs. “It’s good they are talking, but at that level of engagement we doubt anything significant will come out of it."

The US dollar gave up early gains, set for its sixth straight day of selling after Trump’s criticism of the Federal Reserve’s rate rises in a Reuters interview. The dollar index fell 0.3% to 94.98, while the euro hit a two-week high against the greenback, at $1.1605.

Emerging-market stocks climbed 0.4%, leaving 13-month lows further behind as the dollar’s losses helped ease pressure on the index which entered bear territory last week, nearly $1 trillion market cap down from its January peak. “If you look at the transmission from economic growth to earnings growth to shareholder returns, it’s strongest in the US, it’s ok in Europe and pretty weak in EM," said Goldman’s Kilmurray, who has been underweight emerging markets for five years.

“The question we’re getting asked now by investors is whether what we see in EM is a sign that something bigger is going wrong in the global economy. Our answer to that is no, these issues have been local issues," he said.

A new threat of further sanctions on Russia from US lawmakers hit the rouble and backed the market’s view that Russian sanctions would increase in severity regardless of the Trump administration.

Chinese investors sold shares overnight, sending the Shanghai Composite index down 0.7 percent after the country’s central bank said it would not resort to strong stimulus to support growth.

German 10-year Bunds bucked the trend set by Treasuries. Yields on the euro zone benchmark bond hit their highest since 10 August, tightening the gap with the US as the euro zone economy showed signs of improvement.

Investors were also looking to Wednesday’s release of minutes from the U.S. Federal Reserve’s August meeting and a speech by Fed Chairman Jerome Powell on Friday for clues on future rate hikes.

“This could present the opportunity for the Fed to discuss longer-term issues, potentially including discussion around the balance sheet and the implementation of monetary policy," said Jim Reid, strategist at Deutsche Bank.

In commodity markets, U.S. crude rose 1.8 percent to $67.04 a barrel and Brent crude climbed 1.8% to $73.94 per barrel on an industry report showing a drop in U.S. crude inventories. Copper prices declined ahead of the trade talks. Spot gold, however, rose 0.3% to $1,199.5 an ounce.

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