GLOBAL MARKETS-Fragile calm returns to stock markets as yuan steadies

* Asian stocks on course to post first gains in nine
sessions
* Yuan steadies for now, off record-low hit on Tues
* Gold hits 6-yr high, U.S. Treasuries well bid
* RBNZ seen cutting rates as Sino-U.S. row hits global
economy

By Hideyuki Sano
TOKYO, Aug 7 (Reuters) - Asian shares steadied slightly on
Wednesday as investors caught their breath from a searing
week-long selloff, with steps taken by Chinese authorities to
contain a sliding yuan helping calm fears of a full-blown
Sino-U.S. trade and currency war.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS was up 0.05% in early trade after tumbling 8.26%
in the previous eight sessions. Japan's Nikkei .N225 bucked
the trend to slip 0.26%.
On Wall Street on Tuesday, the S&P 500 .SPX gained 1.30%
and MSCI's broad gauge of stocks across the world
.MIWD00000PUS rose 0.50%, its first gain in seven sessions.
The rebound came as the People's Bank of China took steps on
Tuesday to stabilise the yuan with a firmer-than-expected fixing
and a bond sale to signal that the authorities wished to stem
the rout.
Comments from Larry Kudlow, director of the White House
National Economic Council, also soothed sentiment. Kudlow said
on Tuesday the Trump administration wants to continue trade
talks with China and is still planning to host a Chinese
delegation for talks in September. The yuan had fallen sharply on Monday, going past the
symbolic 7-per-dollar level, and prompting Washington to label
Beijing a currency manipulator in a major escalation of the
year-long trade dispute between the world's two largest
economies.
In early Asian trade on Wednesday, the offshore yuan was
flat at 7.0533 yuan per dollar CNH= , off Tuesday's low of
7.1400, its weakest level since international trading in the
Chinese currency began in 2010.
Many investors believe Trump cannot afford prolonged
instability in financial markets since his reputation was staked
so closely on economic growth and the success of the U.S. stock
market.
"Global financial markets have been shaken by concerns that
escalating U.S.-China trade tensions, which now has triggered a
currency war, would cool the world economy substantially,"
Masahiro Fukuda, investment director at Fidelity.
"While we cannot rule out the possibility of political
negotiations leading to unexpected outcomes, we think it is
unnecessary to worry about recession as various fiscal and
monetary stimulus should support the economy of the two
courtiers," he said.
Overall, however, market sentiment remained fragile and
with no clear end in the trade standoff in sight, some investors
expect a rocky session ahead.
Goldman Sachs said it no longer expects a trade deal to be
struck before the November 2020 U.S. presidential election,
while Morgan Stanley warned that more tit-for-tat tariffs could
tip the world economy into recession by the middle of next year.
That rather grim backdrop supported safe-haven assets, with
gold hitting a six-year high of $1,477 per ounce XAU= in early
Wednesday trade. It last stood at $1.474.7.
U.S. bonds have also retained much of their gains made in
the past week. The 10-year Treasuries notes yielded 1.695
percent US10YT=RR , compared to above 2 percent just a week
ago, as investors bet on another rate cut by the Federal Reserve
in September.
In the currency market, the dollar was traded at 106.33 yen
JPY= , down 0.13% from late U.S. levels, but off Tuesday's
seven-month low of 105.52.
The euro stood flat at $1.1203 EUR=EBS . The Australian
dollar fetched $0.67605 AUD=D4 , just a stone throw from its
seven-month low of $0.6748 touched on Monday.
The New Zealand dollar was little changed at $0.6527
NZD=D4 . The Reserve Bank of New Zealand is widely expected to
cut interest rates for the second time this year, by 25 basis
points to all-time low of 1.25 percent on Wednesday, to counter
pressure on the economy from global trade disputes. Oil prices also weakened, with global benchmark Brent crude
slipping to seven-month lows, as trade tensions between the U.S.
and China intensified worries about weakening world demand.
Brent crude LCOc1 futures fell 0.36% to $58.73 a barrel,
near its low on Tuesday of $58.55, a trough last seen in early
January.

(Editing by Shri Navaratnam)