NEW YORK, Aug 20 — Traditional safe-havens including the Japanese yen and US Treasuries were sought out on Tuesday even as there were signs that more economic stimulus was on its way, as traders focused on concerns over a global deceleration.

The prospect of new elections in Italy after the announced resignation of Prime Minister Giuseppe Conte added to global uncertainties, but Italian markets have been jittery over infighting within the coalition and Italian yields fell after the announcement.

The key for markets now is whether pledges for more accommodative policy from Germany to China are enough to assuage concerns about the state of the global economy and end fears of recession.

The immediate focus now shifts to the minutes of the US Federal Reserve’s most recent meeting, due on Wednesday. Traders are also awaiting the Fed’s Jackson Hole seminar and a Group of Seven summit this weekend for clues on what additional steps policymakers will boost economic growth.

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“Market expectations for Jackson Hole and the central banking community in aggregate are extremely dovish,” said Brad Bechtel, managing director at Jefferies in New York. “The US market is pricing a tremendous amount of easing now, along with many other markets around the world. The market is literally trying to force the hand of the central banking community.”

Weighed by the prospect of even lower interest rates, bank shares were among the largest decliners on Wall Street and in Europe.

The Dow Jones Industrial Average fell 6.05 points, or 0.02 per cent, to 26,129.74, the S&P 500 lost 3.25 points, or 0.11 per cent, to 2,920.4 and the Nasdaq Composite dropped 1.52 points, or 0.02 per cent, to 8,001.29.

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The pan-European STOXX 600 index lost 0.55 per cent.

MSCI’s gauge of stocks across the globe shed 0.06 per cent after two days of gains of more than 1 per cent.

Emerging market stocks rose 0.26 per cent boosted by overnight gains in South Korea.

The prospect of more central bank easing drove yields lower, Benchmark US 10-year notes last rose 12/32 in price to yield 1.5572 per cent, from 1.598 per cent late on Monday.

Financial markets went into a tailspin last week after US 2-year yields traded above those of 10-year paper, an inversion that has presaged previous recessions and is widely watched by markets.

The dollar fell against major currencies, in line with the drop in Treasury yields.

The dollar index fell 0.11 per cent, with the euro up 0.14 per cent to US$1.1091.

The Japanese yen strengthened 0.27 per cent versus the greenback at 106.37 per dollar, while Sterling was last trading at US$1.2156, up 0.26 per cent on the day.

Oil prices fell on lingering concerns over future demand, though stimulus hopes helped cap losses.

US crude fell 0.5 per cent to US$55.93 per barrel and Brent was last at US$59.46, down 0.47 per cent on the day.

Spot gold added 0.5 per cent to US$1,501.90 an ounce on bets on further rate cuts at the Fed and on growth concerns. — Reuters