GLOBAL MARKETS-Stocks cling to gains on trade hopes, mixed earnings weigh on Europe

* Mixed earnings weigh on European bourses
* Nikkei hits one-year high after S&P 500 reaches record
* Trump talks up progress on China trade
* EU grants Britain three-month Brexit extension
* Market sees Fed cutting rates, cautious on outlook

By Karin Strohecker
LONDON, Oct 29 (Reuters) - World stocks hovered near a
15-month high on Tuesday underpinned by cautious optimism over a
Sino-U.S trade deal and expectations of another dose of policy
stimulus from the Federal Reserve, with safe havens such as gold
and yen on the back foot.
A mixed bag of earnings offset some of the chipper mood on
European bourses, with the pan-regional STOXX 600 snapping a
six-day losing streak to ease 0.4% and Germany's DAX index
.GDAXI easing 0.2%. .EU
The losses in Europe followed a mixed performance in Asia,
where Japan's Nikkei .N225 rose 0.4% to reach levels last seen
a year ago. Shanghai blue chips .CSI300 dithered either side
of flat.
U.S. President Donald Trump said on Monday he expected to
sign a significant part of a trade deal with China ahead of
schedule but did not elaborate on the timing. The U.S. trade representative also said Washington was
studying whether to extend tariff suspensions on $34 billion of
Chinese goods set to expire on Dec. 28. But analysts cautioned that trade tensions were far from
over.
"It isn't yet clear that an interim deal that kicks trade
worries down the road would be sufficient to allay concerns
about the geopolitical, economic, earnings, and policy
backdrop," Mark Haefele, CIO at UBS Global Wealth Management.
"President Trump's announcement of a Chinese commitment to
buying $40–50 billion of U.S. agricultural products appears
unrealistic – U.S. exports to China peaked at just $26 billion
in 2012, when prices were much higher."
U.S. futures ESc1 NQc1 pointed to a mixed open on Wall
Street after Monday's rally that saw the S&P 500 .SPX gain
0.56% to a record closing peak and the Dow .DJI rise 0.49% and
the Nasdaq .IXIC 1.01%. .N
Microsoft Corp MSFT.O climbed 2.46% in late NY trade after
winning the Pentagon's $10 billion cloud computing contract,
beating out Amazon.com Inc AMZN.O . Google parent Alphabet Inc GOOGL.O meanwhile slipped after
missing analysts' estimates for quarterly profit even though
revenue growth topped expectations. AND SEE
With markets in wait and see mode for Fed and trade
developments, bond yields inched lower. Germany's benchmark
10-year bond yield hovered just below three-month highs hit on
Monday, when yields across the single currency bloc rose sharply
after the European Union granted Britain a Brexit extension.
Yields on two-year Treasury notes were treading water after
US2YT=TWEB hitting four-week highs on Monday at 1.668%. US/
Investors are still looking forward to a likely rate cut
from the Federal Reserve on Wednesday, though the outlook was
less clear beyond that.
"We expect the Federal Reserve will cut rates this week and
possibly once next year, as insurance against a broad economic
slowdown," BlackRock's chief fixed income strategist, Scott
Thiel, said in a note to clients.
The futures market has 50 basis points of cuts priced in by
June FEDWATCH .
Central banks in Japan and Canada also meet this week, with
talk the former might ease further if only to prevent an
export-sapping bounce in its currency.
The shift from safe harbours saw the yen weaken slightly,
with the dollar standing at 108.89 yen JPY= after having
reached its highest in three months. It was eyeing a key
technical level at 109.31.
The euro edged up to $1.1095 EUR= and was little changed
against a basket of currencies at 97.782 .DXY .
The British pound GBP=D3 meanwhile fell towards a 10-day
low, nearing $1.28 against a broadly stronger greenback as
investors waited for Prime Minister Boris Johnson's next attempt
to push for a general election before the end of the year. GBP/
Spot gold hovered at $1,493 per ounce XAU= , after having
pulled away from last week's top around $1,517.
Oil prices were pressured by signs of rising U.S. crude
stock piles. O/R
Brent crude LCOc1 futures slipped 45 cents to $61.12 a
barrel, while U.S. crude CLc1 lost 53 cents to $55.28.

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