Global shares struggle as oil prices fall

LONDON - Global shares struggled to advance on Monday, with oil prices nearly 2 percent lower.

Weaker US stock index futures weighed on sentiment, while a steadier dollar knocked gold.

The MSCI all country index was barely firmer, a month-long advance that has whittled away the benchmark's decline for the year to 13 percent.

Until now, investors have been grappling with how much more central banks in the United States and Europe would hike rates when they meet next month.

Hopes of a hike in rates on signs that US inflation may be peaking helped Wall Street clock up its fourth straight week of gains by Friday.

The Nikkei share average in Tokyo went to its highest in more than seven months because of the gains on Wall Street and steady growth figures for Japan.

I think it's going to be Fed driven if there is another leg down in markets. Patrick Armstrong, chief investment officer at Plurimi Group said that quantitative tightening would begin in earnest in September and that's going to withdraw liquidity from the market.

Markets are still predicting a 50 percent chance that the Fed will hike by 75 basis points in September and that rates will rise to around 3.50 -- 3.75 percent by the end of the year.

On Wednesday the Fed will publish minutes from its last rate-setting meeting, but investor hopes of them showing the central bank beginning to pivot on rate hikes may be dashed.

I don't think Fed Chair Powell is going to say that, I don't think the minutes are going to indicate that, Armstrong said.

In Europe, the STOXX share index of 600 leading companies was up 0.13 percent at 441.43 points, still down around 10 percent for the year.

S&P 500 futures and Nasdaq futures were both down about 0.5 percent after last week's gains.

Earnings from major retailers, including Walmart and Target, will be scrutinized for signs of flagging consumer demand.

The yield curve is deeply inverted and the bond market seems to doubt the Fed can make a soft landing. Two-year yields at 3.27 percent are well above those for 10 year notes, which were trading at 2.86 percent.

The yields have underpinned the US dollar, though it lost ground against a basket of currencies last week, slipping 0.8% against a basket of currencies.

On Monday, the dollar rebounded with the euro down 0.2 percent against the dollar at $1.02345, after bouncing 0.8 percent last week. The dollar was steady against the yen at 133.51 after losing 1 percent last week.

Jonas Goltermann, a senior economist at Capital Economics, said that the dollar rally will resume before too long.

Gold was down 0.8 percent at $1,786, losing nearly all of its 1 percent gains last week.

Saudi Aramco, the head of the world's top exporter, said it was ready to ramp up output while production at several offshore US Gulf of Mexico platforms is resuming after a brief outage last week.

Brent fell 1.8 percent to $96.35, while US crude fell 1.9 percent to $90.34 per barrel.