NEW YORK (Reuters) - A gauge of global stock markets fell on Tuesday as the latest round of U.S.-China trade talks began with a threat from President Donald Trump, while concerns over a no-deal Brexit continued to drag the British currency lower.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., July 29, 2019. REUTERS/Brendan McDermid

Trump warned China against waiting out his presidency before finalizing a trade deal, saying if he wins re-election in November 2020, the outcome could be no agreement or a harsher one.

Traders are also bracing for the Federal Reserve’s policy announcement on Wednesday, for which markets have already fully priced in a quarter of a percentage point rate cut. A 50 basis-point cut has a 1-in-5 chance, according to futures markets.

“If not for trade policy, we would not be using monetary policy in the way we are using it now,” said Art Hogan, chief market strategist at National Securities in New York.

“The real conundrum is if, in fact, the Fed cuts rates because they are seeing a global economic slowdown and no real inflation, then the administration becomes emboldened to fight this battle longer.”

Major Wall Street stock averages ended slightly lower. The Dow Jones Industrial Average .DJI fell 23.33 points, or 0.09%, to 27,198.02, the S&P 500 .SPX lost 7.79 points, or 0.26%, to 3,013.18 and the Nasdaq Composite .IXIC dropped 19.72 points, or 0.24%, to 8,273.61.

The pan-European STOXX 600 index .STOXX lost 1.47% and MSCI's gauge of stocks across the globe .MIWD00000PUS shed 0.39%.

Emerging market stocks lost 0.25 percent. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 0.09 percent lower, while Nikkei futures NKc1 fell 0.7 percent.

Graphic: MSCI All Country World Index Market Cap - tmsnrt.rs/2EmTD6j

In currencies, sterling continued to stumble against the dollar after suffering its biggest decline in eight months on Monday. Prime Minister Boris Johnson promised on Tuesday to lead Britain out of the European Union on Oct. 31 “no matter what.”

Many investors say a no-deal divorce from the EU would tip Britain into a recession and inject unwanted uncertainty into financial markets.

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The pound GBP= fell to as much as $1.2121, its lowest since March 2017 and was last trading at $1.215, down 0.55% on the day.

“Sterling is moving due to local political developments - most importantly the idea that Prime Minister Johnson may not want to meet European leaders unless they change their position, which is a more hard-line stance than the market would have expected as recently as a week ago,” said Shahab Jalinoos, global head of foreign exchange strategy at Credit Suisse in New York.

The dollar index .DXY tracking the greenback against six major currencies rose 0.03%, with the euro EUR= up 0.09% to $1.1154.

Graphic: Sterling vs other world currencies in 2019 - tmsnrt.rs/2ypmwtS

Graphic: Global currencies vs dollar - tmsnrt.rs/2egbfVh

U.S. Treasury yields rose ahead of the Fed announcement after data showed consumer confidence rebounded in July to its strongest level since November.

Benchmark 10-year Treasury notes US10YT=RR last fell 2/32 in price to yield 2.0597%, from 2.055% late on Monday.

In commodities trading, crude oil prices climbed as the Fed rate cut anticipation boosted demand expectations, but further price action hinges on the Fed’s language.

“If the language we get from the Fed in post-meeting comments is on the conservative, rather than accommodative side, the U.S. dollar is likely to continue to remain strong and continue to present a headwind for an advance in oil,” Harry Tchilinguirian, global oil strategist at BNP Paribas in London, told the Reuters Global Oil Forum.

Prices rose further after API data showed a larger-than-expected draw in U.S. crude stockpiles.

U.S. crude CLc1 rose 2.57% to $58.33 per barrel and Brent LCOc1 was last at $64.97, up 1.98% on the day.

Spot gold XAU= added 0.3 percent to $1,430.39 an ounce. Copper CMCU3 lost 1.33 percent to $5,938.00 a tonne.

Graphic: Global assets in 2019 - tmsnrt.rs/2jvdmXl