Shares steady, dollar edges lower ahead of key U.S. events

NEW YORK (Reuters) - World stock markets were little changed on Monday while the U.S. dollar edged lower against a basket of major currencies ahead of a ream of U.S. data and events this week.

MSCI's All-World Index <.MIWD00000PUS> erased earlier losses to trade flat as major U.S. stock indexes turned positive.

But equity investors were hesitant to make big bets on concerns over new European sanctions against Moscow and ahead of Wednesday's release of U.S. second-quarter gross domestic product. The calendar also includes a Federal Reserve policy announcement on Wednesday and U.S. nonfarm payrolls Friday.

The U.S. dollar edged lower against a basket of major currencies, halting last week's strongest advance since March but still near six-month highs. The euro last traded at $1.3440.

The yield on U.S. two-year Treasuries notes rose to its highest in 2-1/2 weeks early Monday afternoon after a weak $29 billion auction of new two-year notes, part of this week's $93 billion in fixed-rate debt government debt supply.

Short- and intermediate-dated debt has underperformed on expectations the Fed is likely to begin raising rates next year as the economy improves. [US/]

Economists forecast U.S. GDP grew 3 percent in the second quarter after a sharp contraction of 2.9 percent in the first quarter, and expect U.S. employers to have added 233,000 jobs in July, according to Reuters polls.

The Dow Jones industrial average <.DJI> rose 30.44 points or 0.18 percent, to 16,991.01. The S&P 500 <.SPX> gained 1.95 points or 0.1 percent, to 1,980.29 and the Nasdaq Composite <.IXIC> added 2.67 points or 0.06 percent, to 4,452.23.

Russian markets tumbled for a third straight session after the European Union reached an outline agreement on its first economic sanctions on Russia since the downing of a Malaysian airliner.

Moscow's dollar-denominated RTS index <.IRTS> slumped 2.5 percent, the rouble-traded MICEX <.MCX> fell 1.9 percent and the rouble dropped half a percent against both the dollar and the euro.

"We have seen Germany stepping up rhetoric on tougher sanctions on Russia," said Vasileios Gkionakis, Global Head of FX Strategy for UniCredit in London. "Saying stability and peace is the top priority rather than economic interests are strong words."

An index of European shares lost 0.2 percent <.FTEU3>.

Brent crude oil slipped as forecasts for ample supplies in the Atlantic basin and weak demand in Europe and Asia mitigated fears of escalating tension in Ukraine and the Middle East.

September Brent fell 73 cents at $107.66 a barrel while U.S. crude futures for September fell 40 cents to $101.69, after ending last week 1 percent lower.

(Reporting by Angela Moon; Editing by Nick Zieminski)