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Bitcoin extends staggering rally; eyes $90K

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Tariff worries weigh on euro and yuan

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China exposure drags European stocks lower

(Updated prices at 4:02 p.m ET/ 2102 GMT)

By Chuck Mikolajczak

NEW YORK, Nov 12 (Reuters) - A gauge of global stocks

declined on Tuesday after advancing for five straight sessions

while the dollar hit its highest level in over six months as

investors weigh the impact of U.S. President-elect Donald

Trump's likely path of policies.

Investors have flocked in to assets expected to benefit from

Trump policies for his second term in office, after he pledged

to impose high tariffs on imports from key trading partners, as

well as lower taxes and loosen government regulations.

The S&P 500 has surged recently, partly driven by a

jump in shares of banks, which are likely to benefit

from a reduced regulatory burden. Domestically focused small-cap

stocks have jumped on expectations for less competition from

tariffs and lower tax rates, with the Russell 2000

vaulting to a three-year high on Monday.

Bitcoin, the world's biggest cryptocurrency, has shot up

about 30% since the Nov. 5 election, rocketing toward the

$90,000 mark. Trump is seen as a proponent of cryptocurrencies,

promising during his campaign to make the United States the

"crypto capital of the planet."

U.S. stocks have rallied since the election, but closed

slightly lower on Tuesday after each of Wall Street's three

major indexes closed at record levels in the prior session.

But concerns that Trump's policies could cause a

re-emergence of inflation after a long battle to reduce price

pressures following the COVID-19 pandemic have pushed U.S.

Treasury yields and the dollar higher. Markets will get the

latest inflation reading on Wednesday in the consumer price

index (CPI) for October.

"Given the all-time highs we've been hitting over recent

days and we came into today at all-time highs, it's somewhat of

a profit-taking move and consolidation from investors today,"

said Russell Price, chief economist at Ameriprise Financial

Services in Troy, Michigan.

"Markets internationally were down based on perceptions of

what might occur with the tariff action."

The Dow Jones Industrial Average fell 382.15 points,

or 0.86%, to 43,910.98, the S&P 500 fell 17.36 points, or

0.29%, to 5,983.99 and the Nasdaq Composite fell 17.36

points, or 0.09%, to 19,281.40.

Shares of Home Depot ( HD ) shed 1.28%, giving up earlier

gains, after the home improvement retailer reported quarterly

results.

In Europe, shares closed lower, weighed down by names with a

large exposure to China, with news that Trump was expected to

select U.S. Senator Marco Rubio as his secretary of state. Rubio

is seen as the most hawkish option on Trump's list of

candidates.

MSCI's gauge of stocks across the globe

fell 6.17 points, or 0.71%, to 856.93. The STOXX 600

index lost 1.98%, while Europe's broad FTSE EuroFirst 300 index

closed down 40.36 points, or 1.99%, as both suffered

their biggest daily percentage drops since early August.

The yield on benchmark U.S. 10-year notes jumped

12.2 basis points to 4.43%, just off the 4-month high of 4.479%

hit last week.

Aside from the CPI data, several Federal Reserve officials

are speaking this week following the central bank's policy

decision last week to cut interest rates by 25 basis points.

Richmond Fed President Thomas Barkin said that with

inflation close to the Federal Reserve's 2% target, the labor

market resilient and the U.S. central bank in the process of

lowering borrowing costs, policymakers are ready to respond if

inflation pressures rise or the job market weakens.

Minneapolis Federal Reserve Bank President Neel Kashkari

said the economy is "in a good place" and he feels U.S. monetary

policy is currently "modestly restrictive," with short-term

borrowing costs continuing to slow inflation and the economy,

but not by a lot.

The dollar index, which measures the greenback

against a basket of currencies, rose 0.47% to 105.91, with the

euro down 0.28% at $1.0624. The greenback has risen in

four of five sessions since the election to reach 106.17, its

highest level since May 1.

Against the Japanese yen, the dollar strengthened

0.53% to 154.52. Sterling weakened 0.93% to $1.2749.

The dollar strengthened 0.18% to 7.239 versus the

offshore Chinese yuan.

The greenback is expected to continue to strengthen against

China's currency and those sensitive to its economy as a result

of Trump's trade policies and because of expectations of higher

U.S. Treasury yields.

Markets have been scaling back expectations for more rate

cuts from the Federal Reserve, currently pricing in a 58.4%

chance of a 25 basis-point cut at its December meeting, down

from 77.3% a week ago, according to CME's FedWatch Tool.

U.S. crude settled up 0.12% at $68.12 a barrel and

Brent rose 0.08% to settle at $71.89 per barrel on the

day, holding near a two-week low after OPEC's latest downward

revision for demand growth.