Dollar slides on Trump concern, but stocks rise

NEW YORK (Reuters) - 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 percent 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 rose 141.82 points, or 0.69 percent, to 20,804.84, the S&P 500 gained 16.01 points, or 0.68 percent, to 2,381.73 and the Nasdaq Composite added 28.57 points, or 0.47 percent, to 6,083.70.

The three major indexes fell for the week.

The pan-European FTSEurofirst 300 index rose 0.55 percent and MSCI's gauge of stocks across the globe gained 0.73 percent.

Emerging market stocks rose 0.74 percent.

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 was up 1.7 percent after earlier rising over 3 percent. The real strengthened over 3 percent versus the U.S. dollar after having dropped over 7 percent on Thursday.

DOLLAR DOWN, OIL UP

The U.S. dollar fell 0.8 percent against a basket of currencies and was down about 2.1 percent 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 percent 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 percent to $50.41 per barrel and Brent was last at $53.71, up 2.29 percent on the day.

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

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

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

Safe-haven gold posted its best week in five as the dollar softened.

Spot gold added 0.7 percent to $1,255.37 an ounce. U.S. gold futures gained 0.20 percent to $1,255.30 an ounce.

Copper rose 1.93 percent to $5,687.50 a tonne.

(Additional reporting by Dion Rabouin, Sinead Carew, Caroline Valetkevitch, Karen Brettell and Julia Simon; Editing by Chizu Nomiyama)