Dollar slides on Donald Trump concern, but stocks rise

The U.S. dollar fell on Friday and was set to close its worst week in more than a year, with losses steepening after reports an investigation into possible collusion between Russia and Donald Trump's presidential campaign now include a person close to the President.

Stocks pared gains on Wall Street and Treasury yields hit session lows after the report from the Washington Post. Separately, the New York Times reported more details on Trump's recent meeting with Russian diplomats in the Oval Office.

A senior White House adviser is a significant person of interest in the investigation of possible ties between Donald Trump's presidential campaign and Russia, the Post reported citing people familiar with the matter.

It was the most eventful week of the year so far for financial markets, with many major equity markets scaling record highs and then plunging mid-week in one of the sharpest cross-asset routs in years.

Triggering the move was uproar over Trump's firing of FBI director James Comey and allegations he pressed Comey to stop investigating his former national security chief's alleged ties with Russia.

Stocks on Wall Street pared gains of as much as 1 per cent on the S&P 500. The Friday reports out of Washington came after European markets had closed.

"I'm sure some of (the move in markets) is related to that, and the fact that Trump is going to be out of the country and nobody's quite sure what he's going to do," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago, speaking of the latest headlines from Washington.

"We've got two days now to wring our hands about what might happen," he said, adding that the stock market didn't seem too concerned at this point.

The Dow Jones Industrial Average <.DJI> rose 141.82 points, or 0.69 per cent, to 20,804.84, the S&P 500 <.SPX> gained 16.01 points, or 0.68 per cent, to 2,381.73 and the Nasdaq Composite <.IXIC> added 28.57 points, or 0.47 per cent, to 6,083.70.

The three major indexes fell for the week.

The pan-European FTSEurofirst 300 index <.FTEU3> rose 0.55 per cent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> gained 0.73 per cent.

Emerging market stocks rose 0.74 per cent.

Emerging markets have been grappling with an unfolding corruption scandal in Brazil that threatens to engulf its president, Michel Temer.

After cratering on Thursday amid allegations Temer approved hush-money payment to the jailed former house speaker, Brazil's benchmark Bovespa stock index <.BVSP> was up 1.7 per cent after earlier rising over 3 per cent. The real strengthened over 3 per cent versus the U.S. dollar after having dropped over 7 per cent on Thursday.

DOLLAR DOWN, OIL UP

The U.S. dollar fell 0.8 per cent against a basket of currencies <.DXY> and was down about 2.1 per cent for the week, its largest weekly drop since April 2016. Besides worries surrounding Trump, the U.S. currency has suffered from a resurgent euro, which has gained more than 2 per cent this week.

"The dollar overall, across the board, has been getting beat up this week and a lot of that has to do with the political risk here in DC," said John Doyle, director of markets at Tempus Inc in Washington. "While we saw a little bit of a reprieve (Thursday), we're right back on that dollar weakness train."

Oil prices posted a second week of gains. Expectations increased that big crude exporters will extend output cuts to curb an inventory glut.

U.S. crude rose 2.15 per cent to $50.41 per barrel and Brent was last at $53.71, up 2.29 per cent on the day.

Brent posted its largest weekly advance of the year, while U.S. crude gained over 5 per cent.

Benchmark 10-year notes last fell 1/32 in price to yield 2.2346 per cent, from 2.233 per cent late on Thursday.

The 10-year yield had fallen to 2.181 per cent on Thursday, its lowest since April 19.

Safe-haven gold

Spot gold

Copper rose 1.93 per cent to $5,687.50 a tonne.