* Strong dollar steadies
* European shares wobble as Russia convey goes into Ukraine
* Investors await Yellen's, Draghi's speeches in Jackson
* Nikkei snaps 9-session winning streak
By Marc Jones
LONDON, Aug 22 The high-flying dollar steadied
on Friday as markets waited for steers on U.S. monetary policy,
while escalating tensions over Ukraine halted a strong run-up by
Fears the conflict would worsen before next week's meeting
between Vladimir Putin and Ukraine President Petro Poroshenko
pushed up safe-haven assets, but was not enough to distract
markets from the main focus of when cheap and easy credit was
likely to come to an end.
U.S. Federal Reserve Chair Janet Yellen and European Central
Bank President Mario Draghi are both speaking later at the
annual gathering of central bankers in Jackson Hole, Wyoming.
Talk will focus on labour markets and economic prospects but
traders will be listening for any clues about the timing of U.S.
interest rate rises and how the ECB plans to tackle the euro
zone's growth and stubbornly-low inflation problems.
"Everyone expects Janet Yellen to make another speech that
the labour market isn't as rosy as the headline employment
numbers suggest," Aberdeen Asset Management portfolio manager
Luke Bartholomew said.
"We are all set up for her to be dovish, so the surprise
would be if she wasn't."
With that uncertainty in mind, Wall Street was expected to
see a subdued restart and the dollar was hovering
just below its 2014 peak against a basket of major currencies.
European shares were heading for their biggest
weekly gain since February but dipped after a Russian convoy of
aid trucks entered eastern Ukraine without Kiev's permission.
News the Red Cross was also not moving into Ukraine with the
Russian trucks as planned triggered stock
selling in London, Frankfurt and Paris.
Shares in Moscow tumbled over 2 percent to bring
this week's rally to an abrupt halt, and the rouble also
"The Ukraine headlines saw both the Swiss franc and the yen
rise, but gains have been relatively muted," said Alvin Tan,
currency strategist at Societe Generale. "The big mover, I
guess, will be Yellen's speech later in the day."
Asian share markets had hitched a ride overnight on another
record close for Wall Street to end at a six-and-half-year high.
JANET AT JACKSON
Yellen makes her first trip to Jackson Hole as Fed chair
after U.S. data on Thursday showed home resales rose to a
10-month high in July, unemployment claims fell and a gauge of
future economic activity grew solidly.
Kansas City Fed President Esther George said the time had
come for higher U.S. rates, though less hawkish San Francisco
Fed President John Williams suggested the bank should wait until
Yields on rate hike-sensitive 2-year U.S. government bonds
have risen the most since March this week. In contrast, worries
about the euro zone slipping towards deflation and near-zero
growth pinned German 10-year government bond yields firmly
below 1 percent on Friday.
ECB President Mario Draghi is under pressure to use his last
remaining tool - printing money to buy huge amounts of bonds -
to tackle near-zero inflation but he is not expected to show any
renewed urgency in that regard when he speaks later.
Market measures of euro zone inflation expectations have
been nose-diving in recent weeks following a run of poor data.
They now even predict the bloc will be in a worse position than
deflation-prone Japan in 30 years' time.
"The odds of QE in the near term are relatively low,"
Pimco's European strategist and portfolio manager Myles Bradshaw
said. "The market is thinking more about what will happen in
As MSCI's broadest index of Asia-Pacific shares outside
Japan ended the week within a few points of a
6-1/2-year, the main emerging market index hit a
The index tumbled last May and in January when U.S. rate
hike talk was also top of the agenda. But this time stocks in
China have risen for the last six weeks and even
Russian stocks remained on course for a second week of
In commodities trading, spot gold rose 0.3 percent to
$1,281 an ounce, after losing 1.3 percent on Thursday as rate
rise expectations sent it ploughing through some key support
levels to a two-month low.
Copper, finely tuned to China's fortunes, was eyeing a
seven-week high while U.S. crude was slightly higher at
$93.98 a barrel but still set to post a fifth straight weekly
The sophistication, wealth and military might of Islamic
State represent a major threat to the United States that may
surpass that once posed by al Qaeda, U.S. military leaders said
on Thursday. So far, however, the fighting has had little impact
on oil supply.
(Additional reporting by Anirban Nag in London; Editing by
Louise Ireland and John Stonestreet)