By Saqib Iqbal Ahmed
NEW YORK (Reuters) - The U.S. dollar fell to a seven-week low against a basket of other major currencies on Monday and global stock markets were shaky over investor concerns about protectionist rhetoric by U.S. President Donald Trump.
U.S. Treasury yields slipped, with benchmark yields posting their biggest one-day drop in more than two weeks and gold rallied as demand for safe-haven assets was boosted by Trump's stance on trade.
On Monday, Trump told U.S. manufacturing executives he would impose a hefty border tax on firms that import products into the United States after moving American factories overseas.
He also formally withdrew the United States from the Trans-Pacific Partnership trade deal.
Fears of a protectionist White House, and scant details on proposed tax cuts, infrastructure spending and deregulation, have prompted some investors to reassess the level of possible future government stimulus to bolster the U.S. economy.
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"Given that the president's first order of business is challenging trade deals, it has probably caught a number of optimistic investors off balance," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.
"Investors were positioning for tax cuts and regulatory roll-backs out of the gate. Perhaps they are impatient but they are certainly disappointed."
The dollar index , which measures the greenback against six major rivals, was down 0.57 percent at 100.17.
The safe-haven yen has been the main beneficiary of recent U.S. political uncertainty, rising for a second session against the dollar.
MSCI's world index , which tracks shares in 46 countries, was little changed. The index found little support from Wall Street as investors turned defensive.
"Investors are really trying to gauge what the potential fallout or impact of Trump's approach to trade, economics, taxes and regulation looks like," said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.
The Dow Jones Industrial Average fell 27.4 points, or 0.14 percent, to finish at 19,799.85, the S&P 500 lost 6.11 points, or 0.27 percent, to end at 2,265.2 and the Nasdaq Composite dropped 2.39 points, or 0.04 percent, to close at 5,552.94.
Among individual stock movers, shares in Qualcomm Inc dived almost 13 percent after it was sued by Apple on Friday.
European shares fell, weighed down by banks, oil stocks and a fall in Fingerprint Cards after the firm's former CEO and a board member were arrested.
Europe's broad FTSEurofirst 300 index closed down 0.48 percent at 1,425.49, its lowest close this year.
The United Kingdom's Supreme Court will deliver its ruling on Tuesday on whether Prime Minister Theresa May can begin the process of Britain leaving the European Union without parliament's assent, potentially giving lawmakers a chance to have a vote on Brexit.
In bond markets, U.S. Treasury yields slipped ahead of $88 billion in government debt supply this week as investor jitters over Trump's tough stance on trade spurred safe-haven demand for bonds. [nL1N1FD1L2]
The yield on benchmark 10-year Treasury notes was down 6 basis points at 2.403 percent, marking its steepest single-day drop since Jan. 5, according to Reuters data.
Oil prices eased as signs of a strong recovery in U.S. drilling largely overshadowed news that OPEC and non-OPEC producers were on track to meet output reduction goals.
Brent crude settled down 26 cents, or 0.47 percent, at $55.23 a barrel, and U.S. crude settled down 47 cents, or 0.88 percent, at $52.75.
Gold rose to the highest in two months as uncertainty over Trump's economic policies led investors to reach for safe-haven assets.
Spot gold was up 0.51 percent to $1,215.78 an ounce.
(Additional reporting by Richard Leong and Chuck Mikolajczak; Editing by Nick Zieminski and James Dalgleish)