By Jeremy Gaunt, European Investment Correspondent
LONDON, May 21 (Reuters) - It may be a cliche, but it is true -- nothing upsets markets more than uncertainty.
Heading into a new week, investors are beset by it, hammered by worries over everything from potentially slowing economic growth and striking workers to wrenching changes in currency rates and fears about boisterous populism among governments.
Berlin's ban on speculators and Washington's plans for bank reform have come as additional headaches for those wanting to know what the future will bring.
With no one factor dominating markets except fear, the volatile mood is likely to continue into a week that includes a meeting of G20 negotiators, U.S.-China economy talks and a visit to Europe from U.S. Treasury Secretary Tim Geithner.
Financial markets, in the meantime, have been growling like a bear.
MSCI's all-country world stock index <.MIWD00000PUS> has lost around 12 percent this month with its emerging market counterpart <.MSCIEF> down some 14 percent.
The euro, rattled by the debt crisis, has fallen more than 5
percent this month against the dollar
Safe haven U.S. bond funds are among the few beneficiaries of the mood, according to the lastest flow data from fund trackers EPFR Global. [ID:nSGE64K034]
Many of the latest moves were triggered during the past week by a renewed worry hitting investors, that of governments moving to regulate the way markets work in way not seen for decades.
Germany rather spectacularly shocked investors with its immediate ban on naked short selling of euro zone government bonds and shares in 10 leading German financial institutions, as well as transactions in credit default swaps (CDS) linked to euro government bonds.
Although many investors reckoned the impact itself would be limited, the idea that governments might suddenly do something along those lines greatly unsettled them. "It creates quite a lot of unnecessary uncertainty. The concern is that we are now in an environment where legislation is being rushed through without thinking about it," said John Stopford, head of fixed income at Investec Asset Management.
Germany was not alone in seeking to change the rules.
The U.S. Senate on Thursday approved a well-flagged, but nonetheless sweeping Wall Street reform bill designed to prevent future government bailouts of financial institutions and to protect consumers.
MEETING FOCUS
With this in mind, investors will be nervously looking on at a series of high-level meetings in the coming week at which the world's current economic and market imbalances will be on the agenda.
Negotiators, or sherpas, for the Group of 20 nations meet in Calgary early in the week to put together plans for a summit later in the year in Toronto and a finance ministers meeting in Busan, South Korea.
A G20 deputies meeting in Berlin on May 19 discussed the fact that while the "real" economy is recovering, disruptions in financial markets continue, according to one official present.
It could well be brought up again in Calgary.
The United States and China, meanwhile, meet for what is dubbed a strategic and economic dialogue on Monday and Tuesday with the U.S. view that China's yuan is undervalued haunting the background.
The dollar's broad-based rise against other major currencies -- sparked by the euro's troubles, but also a general flight to safety -- may make life harder for U.S. exporters but it has also made a Chinese yuan move less likely.
One result may be that the two sides will find agreement about the need to stem the euro's slide, particularly as the yuan has risen 11 percent against the euro since mid-April. On his way home from China, meanwhile, U.S. Treasury chief Geithner has decided to stop over in Europe, partly to meet new British counterpart George Osborne but also to have talks with euro zone officials.
He will meet European Central Bank President Jean-Claude Trichet in Frankfurt and German Finance Minister Wolfgang Schauble in Berlin on Thursday.
Geithner said in a CNBC television interview that he wants to see Europe stick with agreed plans for restoring economic stability to the region.
He said it was important to keep moving on the 750-billion-euro package of loans -- from the European Union and International Monetary Fund -- to prevent the European debt crisis from spreading.
NO CAPITULATION
While there is no doubt, meanwhile, that investors are rattled by the return of regulatory pressure and other worries, the flight to safety has not been unambiguous.
EPFR Global's flow tracking showed that as well as U.S. bond funds becoming popular, supposedly higher-risk emerging market bonds continued to attract investors.
They had net inflows of $533 milion in the week to May 19. Record inflows were seen for the asset class in both March and April.
At the same time, EPFR noted that money market funds, the safest of safe havens, saw net outflows of $33.9 billion.
"(It suggests) that sentiment has not turned to the point where capital preservation is the overriding concern," the firm said. (Additional reporting by Swaha Pattanaik, Brian Love and Glenn Somerville; editing by Jason Webb)