(Updates prices to late afternoon with oil settlement)

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Euro extends decline after Monday's retreat

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Wall St indexes edge lower up before Fed, mega cap

earnings

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Analysts warn tariffs are drag on EU and US economies

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Oil rises after Trump shortens Russia deadline

By Sinéad Carew and Nell Mackenzie

NEW YORK/LONDON, July 29 (Reuters) - Global equities

lost ground on Tuesday as U.S. investors awaited earnings

reports from megacap companies and the Federal Reserve's next

policy decision due on Wednesday, while oil prices jumped as the

U.S. threatened China with higher tariffs if it keeps

buying Russian oil.

Oil prices soared by more than $2 after U.S. Treasury

Secretary Scott Bessent said China could see high tariffs if it

continues to buy oil from Russia. He made the threat after

saying that two days of

U.S.-China trade talks

in Stockholm had been very constructive.

Bessent's comments followed a threat from

U.S. President Donald Trump

that the US would start imposing tariffs and other measures

on Russia "ten days from today" if Moscow did not make progress

toward ending the war in Ukraine.

The dollar advanced against major currencies including the euro,

which hit a one-month low and eyed its fourth straight day of

declines as investors sobered up to the fact that the new

U.S.-EU trade deal favoured the United States and did little for

the 27-nation bloc's economic outlook.

While monitoring trade updates, investors were also

preparing for inflation and payroll reports as well as quarterly

results from large companies such as Microsoft ( MSFT ), Meta

Platforms ( META ), Apple ( AAPL ) and Amazon ( AMZN ).

And as if this wasn't enough to worry about they are also

waiting for the Fed's policy statement and commentary, due on

Wednesday afternoon following the U.S. central bank's two-day

meeting. The Fed is widely expected to keep interest rates

steady, pending more clarity on the impact of tariffs on

inflation, even with constant demands from Trump for rate

cuts.

"Trading is biased to the upside. But given that we have a

barrage of information coming in over the next couple days,

traders and investors are going to be a little bit hesitant,"

said Anthony Saglimbene, chief market strategist at Ameriprise.

The S&P 500 registered record closing highs in the last six

sessions. On Tuesday, the index breached 6,400 for the first

time before pulling back due to "a little bit of psychological

hesitancy" about moving past the big round number, Saglimbene

said.

The strategist also pointed to signs of pressure from

tariffs in quarterly results.

United Parcel Service ( UPS )

reported quarterly profit marginally below estimates and

did not issue annual revenue and margin forecasts. Procter &

Gamble on Tuesday forecast annual results largely below estimates

and said it would

raise prices on some products

in the U.S. to steer it through tariff uncertainty.

While traders have been betting the Fed will make its next rate

cut in September, they will carefully monitor the week's data

for signs of inflation or job market weakness. Canada's central

bank also convenes Wednesday and is widely expected to also hold

rates steady.

On Wall Street at 02:50 p.m., the Dow Jones Industrial

Average fell 223.34 points, or 0.50%, to 44,614.22, the

S&P 500 fell 13.80 points, or 0.22%, to 6,375.97 and the

Nasdaq Composite fell 35.12 points, or 0.17%, to

21,143.46.

MSCI's gauge of stocks across the globe

fell 2.65 points, or 0.28%, to 936.72. Earlier, the pan-European

STOXX 600 index closed up 0.33% after falling on

Monday.

TARIFF ECHOES

A U.S.-EU trade deal, announced on Sunday, included 15% tariffs

on EU imports to the U.S. and bolstered expectations that more

such agreements will follow ahead of Trump's August 1 deadline

for trade deals. Trump also flagged a "world tariff" rate of

15%-20% on all trading partners that were not negotiating a deal

- among the highest rates since the Great Depression of the

1930s.

In currencies, the dollar index, which measures the

greenback against a basket of currencies including the yen and

the euro, rose 0.29% to 98.90.

The euro was down 0.35% at $1.1547. Against the

Japanese yen, the dollar weakened 0.03% to 148.49.

In U.S. Treasuries, yields slid across the board, reversing the

previous session's gains, after a less-than-stellar report on

job openings for June and ahead of Wednesday's Fed decision and

a government announcement of financing plans for this quarter.

The yield on benchmark U.S. 10-year notes fell 9

basis points to 4.33%, while the 30-year bond yield

fell 9.5 basis points to 4.8705%.

The 2-year note yield, which typically moves in

step with interest rate expectations for the Federal Reserve,

fell 4.5 basis points to 3.877%.

In energy markets, oil prices, already extending Monday's rally

due to supply concerns related to Trump's threats against

Russia, jumped another leg higher after Bessent's comments.

U.S. crude settled up 3.75%, or $2.50 at $69.21 a

barrel, while Brent settled at $72.51 per barrel, up

3.53%, or $2.47, on the day.

Gold prices rose as markets turned their focus to trade

talks and the Fed's policy decision. Spot gold rose 0.4%

to $3,327.41 an ounce.