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* Stocks fall, core bond rise in early trade
* Small moves suggest caution, not concern- economists
* Dollar off 7-month highs with eyes on Fed minutes
By Marius Zaharia
LONDON, Nov 18 (Reuters) - European investors edged back
into safer assets on Wednesday as a shootout between French
police and militants suspected of involvements in the Paris
attacks kept the market focused on international security
issues.
Stocks fell and core bonds rose, but the scale of the moves
reflected caution rather than significant concern, economists
said.
The pan-European FTSEurofirst 300 index .FTEU3 , which had
risen 2.6 percent on Tuesday, fell 0.7 percent while the euro
zone's blue-chip Euro STOXX 50 index .STOXX50E declined by 0.8
percent.
German Bund yields DE10YT=TWEB fell 2 basis points to 0.51
percent, hitting their lowest in two weeks.
The dollar was just off 7-month highs against a basket of
currencies, as minutes from the latest Federal Reserve policy
meeting were expected to underpin expectations of an interest
rate hike in December.
The dollar strength hit commodities, with London copper
falling towards new six-year lows.
Friday night's attacks in the French capital, claimed by
Islamic State, triggered security alerts around the world, with
an international soccer match called off in Germany and two Air
France AIRF.PA flights from the United States diverted. The
planes were later declared safe.
In Paris, gunfire and explosions shook the suburb of St
Denis early on Wednesday as police surrounded a building where a
Belgian suspected of masterminding the attacks was believed to
be holed up.
The European Central Bank is expected to supercharge
monetary policy easing next month, a prospect the attacks have
made even more likely.
The bank's chief economist Peter Praet said on Tuesday that
such events hurt confidence while executive board member Yves
Mersch said on Wednesday that "doom and gloom" talk was at this
stage not warranted.
"There's absolutely no reason not to expect the ECB to ease
next month and we've had further falls in commodity prices that
adds to the subdued inflation outlook," said Chris Scicluna,
head of economic research at Daiwa Capital Markets in London.
"The events in Paris compound that and compound the
weaknesses in the euro area."
FED MINUTES
The dollar index was lower at 99.501 .DXY after touching
99.745 on Tuesday, its highest since mid April. It has risen 6.3
percent in the past month as market odds for a U.S. interest
rate hike in December moved from around 30 percent to 66
percent.
This week's data further cemented rate hike expectations.
Monthly U.S. consumer prices increased in October after two
straight months of declines, putting annual core inflation at
1.9 percent.
Industrial output fell short of market expectations but
output in the manufacturing sector posted a solid increase.
"It will be a case of range-trading going into the Fed
minutes. We could see some positions being pared, with the
dollar having risen in the past few weeks," said Jeremy Stretch,
head of currency strategy at CIBC World Markets.
The dollar's dip saw the euro regain ground. It rose to
$1.0670 EUR= , having dropped to a seven-month low of $1.0630
on Tuesday.
Gold hit a 5-1/2-year low of $1,064.95 per ounce XAU=
overnight as the strong dollar offset its traditional safe-haven
appeal. In Europe, it was up 0.07 percent on the day at $1,071.4
an ounce.
Oil prices rose following reports of falling stockpiles and
rising refinery activity, though they remained not far from
6-1/2-year lows hit in August on persistent concerns about a
global supply glut.
U.S. crude futures CLc1 were up almost half a dollar to
$41.13 a barrel, while Brent crude futures LCOc1 traded at
$44.13 per barrel.