* U.S. lawmakers make late effort to avoid fiscal crisis
* MSCI all-world index dips as U.S. stocks open lower
* Yen hits 2-year low vs dollar before Japan stimulus
By Marc Jones and Caroline Valetkevitch
LONDON/NEW YORK, Dec 28 Global stocks edged
lower along with the euro on Friday as the White House and U.S.
lawmakers planned to make a late effort to avoid the U.S.
Elsewhere, expectations that Japan will inject new stimulus
into its economy pushed the yen to a two-year low for a third
President Barack Obama and Democratic and Republican
lawmakers were scheduled to meet on Friday as the deadline looms
for reaching a deal on the budget to avert massive tax increases
and spending cuts which could drag the economy into recession -
and others around the world along with it.
The participants in the 3 p.m. session (2000 GMT) will
attempt to smooth over sharp differences over raises taxes on
higher-income Americans and spending cuts in politically
sensitive social welfare programs such as Medicare and Medicaid.
The MSCI all-world share index was down 0.2
percent, while U.S. stocks opened lower.
The Dow Jones industrial average was down 71.88
points, or 0.55 percent, at 13,024.43. The Standard & Poor's 500
Index was down 8.24 points, or 0.58 percent, at 1,409.86.
The Nasdaq Composite Index was down 15.22 points, or
0.51 percent, at 2,970.68.
The pan-European FTSEurofirst 300 was down 0.5
percent and was on track for a small weekly loss.
Going over the fiscal cliff - allowing $600 billion of
higher taxes and lower spending cuts to start coming into force
in January - would prevent U.S. debt spilling beyond a $16.4
trillion agreed limit. However, analysts fear that such measures
could wipe as much as 4 percent off the country's growth rate,
if left unchecked.
"Obviously all eyes will be on Washington and the headlines
coming out of Washington will dictate today's market movement,"
said Peter Cardillo, chief market economist at Rockwell Global
Capital in New York.
"The big thing is whether Washington will reach a deal by
EURO FALLS, YEN HITS LOW
The euro was down 0.2 percent on the day at $1.3210,
having slipped to a session low of $1.3164 when traders said it
broke below stop loss sell orders around $1.3170.
An agreement on the U.S. budget would be viewed as positive
for riskier currencies such as the euro and Australian dollar,
while a deadlock or snags in fiscal negotiations to avoid a
fiscal cliff is deemed positive for the safe-haven and highly
The yen's unabated slide since Shinzo Abe took the helm as
Japan's prime minister on Wednesday has hit fresh two-year lows
for three straight days. Abe has vowed to press for aggressive
monetary stimulus to fight deflation.
The dollar was steady against the yen at 86.07 yen,
edging away from an earlier peak of 86.64 yen, its strongest
since August 2010, when it stopped just shy of reported options
barriers at 86.75 yen and 87.00 yen.
In the U.S. bond market, benchmark Treasuries yields dropped
to their lowest levels in two weeks as concerns that the economy
would be harmed by tax hikes and spending cuts and a fall in
consumer confidence spurred demand for safe-haven bonds.
Benchmark 10-year notes rose 8/32 in price,
with yields falling to 1.71 percent, down from 1.73 percent on
Thursday and from a two-month high of 1.85 percent a week and a
Despite the tensions over the U.S. budget talks, the mood in
financial markets has been improving in recent weeks. Data from
emerging economies have shown signs of a pick-up while analysts
are hopeful that Europe may also soon bottom out.
Fresh signs that China's economy is improving pushed
growth-attuned copper prices as high as $7,955 a tonne, on track
for the biggest weekly rise in a month.
A Reuters poll showed economists think China's factory
activity probably expanded at its fastest pace in eight months