LONDON- Stocks fell and bonds staunched a sell-off on Wednesday as investors looked for an agreement on a U.S. coronavirus stimulus package, while the dollar fell to its lowest in six weeks.

The MSCI world equity index, which follows shares in nearly 50 countries, was flat, its earlier Asia-powered gains eroded when European shares turned negative in early trading and fell further through the morning.

The Euro STOXX 600 was last down 0.9%, led lower by healthcare and real estate shares. Indexes in Paris and Frankfurt were down 1% and 0.9% respectively. Gains for sterling put pressure on London shares.

Wall Street stock futures fell in volatile trading, and were down 0.2%. 

The skittish mood reflected uncertainty over the prospects of a U.S. fiscal stimulus package intended to bolster a recovery from the economic damage caused by the coronavirus.

Earlier, Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.4%. Investors were betting on riskier assets as the White House and Democrats in the U.S. Congress moved closer to agreement on the stimulus package.

President Donald Trump said he was willing to accept a $2.2 trillion aid bill despite opposition from his own Republican Party. But investors were nervous over whether any such package would pass the Republican-controlled Senate.

A senior Republican aide told Reuters that Senate Majority Leader Mitch McConnell has privately told his fellow Republicans he did not favour a deal before the Nov. 3 elections.

"Everyone knows that more stimulus needs to come through," said Hugh Gimber, global market strategist at J.P. Morgan Asset Management. "I'm not overly optimistic on prospects for more stimulus before the election."

Bets on the stimulus also played out in government bonds markets. U.S. Treasury yields rose to a four-month high in Asian trading, with the yield curve steepening, then dropped.

Investors also sold benchmark euro zone debt, with German Bund yields rising to their highest for a week before falling again.

Deutsche Bank analysts wrote that a stimulus package is increasingly priced in, either by the time of the election or by early next year.

DOLLAR DOWN, YUAN UP

The dollar fell to a six-week low against a basket of currencies as hopes for a pre-election stimulus package led traders to buy riskier currencies. It was last down 0.3% at 92.809, amid the doubts any package could pass the Senate.

The Chinese yuan reached a more than-two year high on firmer central bank guidance and recent data showing a sustained recovery in the world's second-largest economy.

The yuan was up 0.3% at 6.6552, taking gains against the dollar this year to around 4.5%. Its rise helped lift the Australian dollar, weighed down by expectations of a rate cut in November, from Tuesday's three-week low.

Elsewhere, sterling rose to a one-week high against the U.S. dollar on Wednesday after the European Union's Brexit negotiator Michel Barnier said a new trade deal with Britain was "within reach". 

The pound rose 0.8% to $1.3050, its highest since Oct. 14. The British currency also rose against the euro by 0.6% to 90.80 pence on the comments.

(Reporting by Tom Wilson; editing by Larry King) ((T.Wilson@thomsonreuters.com; +44 (0)20 7513 5676; Reuters Messaging: t.wilson.thomsonreuters.com@reuters.net))