GLOBAL MARKETS-Stocks recover but disquiet over trade talks lingers

* S&P500 futures almost flat after 1.3% fall earlier
* NYT says Trump to concede on Huawei
* China's Liu to cut short his visit to Washington - SCMP
* Sterling dogged by Brexit worries, Turkish lira slumps
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Hideyuki Sano
TOKYO, Oct 10 (Reuters) - Global stocks recouped early
losses as news reports raised hopes that the United States and
China would settle some economic disputes, but investors were
kept on edge by an earlier report that trade talks due to begin
on Thursday could be cut short.
U.S. S&P500 mini futures ESc1 traded down 0.1%, with a big
part of early losses cut after the New York Times reported
Washington will soon issue licenses allowing some U.S. firms to
supply non-sensitive goods to China's Huawei Technologies.
HWT.UL Another report, from Bloomberg, that the White House is
looking at rolling out a previously agreed currency pact with
China, also raised hopes of a partial deal and helped to lift
risk assets. MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.24% while Japan's Nikkei .N225 rose
0.34%. Shanghai shares .SSEC also rose 0.49%.
European stocks are on course to open higher, with
pan-European Euro Stoxx 50 futures STXEc1 rising 0.17% in
Asian trade.
Earlier U.S. stock futures slumped as much as 1.3%, as the
South China Morning Post (SCMP) reported the Chinese delegation,
headed by Vice Premier Liu He, was planning to leave Washington
after just a day of minister-level meetings, instead of as
originally planned on Friday. Top negotiators from the two countries were scheduled to
meet in Washington on Thursday and Friday to try to end a
bruising 15-month-old trade war.
Though there were some conflicting reports on whether Liu's
plans have been changed, many market players remained cautious.
Without significant progress, U.S. President Donald Trump is
set to hike the tariff rate on $250 billion worth of Chinese
goods to 30% from 25% next Tuesday.
"Barring any surprise today, it looks like their talk is
breaking down. The tariff will be hiked. The situation looks
dire," said Norihiro Fujito, chief investment strategist at
Mitsubishi UFJ Morgan Stanley Securities.
China is unlikely to be willing to make an easy compromise
with a U.S. president who seems increasingly vulnerable to
domestic political pressure as opposition Democrats seek to
impeach him, analysts also said.
U.S. Democratic presidential contender Joe Biden called for
the impeachment of Trump for the first time in a deepening
partisan fight over a congressional investigation of the
Republican president. "Mr. Trump's recent impeachment risk has turned the
timetable against him, Chi Lo, senior economist at BNP Paribas
Asset in Hong Kong, wrote in a report to clients.
"While China is not eager to reach a trade deal, Mr. Trump
is, however, under pressure to get at least a temporary deal
done to help his re-election bid before his impeachment risk
rises and the U.S. economy weakens further," Chi said.
In the currency market, the offshore yuan reversed early
losses to gain 0.3% to trade at 7.1148 per dollar CNH=
following the Bloomberg report about a U.S.-China currency pact.
"The yuan rose on expectations of a currency pact. If there
will be such an agreement, the yuan could rise to 6.9 to the
dollar. But the trouble is, no one knows what's in that pact
that they had reportedly agreed in February," said Ei Kaku,
currency strategist at Nomura Securities.
In the onshore trade, the renminbi gained 0.25% to 7.1130
CNY=CFXS .
The safe haven yen and Swiss franc gave up most of their
early gains.
The yen last stood almost flat at 107.56 JPY= while the
Swiss franc traded at 0.9946 franc per dollar CHF= , about 0.1%
higher than late U.S. levels. The euro firmed slightly to
$1.0986 EUR= .
Sterling wobbled near one-month lows against the dollar and
the euro as hopes of a break-through on a key sticking point for
a Brexit deal were dashed.
Northern Ireland's Democratic Unionist Party, a coalition
partner in the British government, said it would emphatically
oppose a reported European Union concession on the Irish
backstop under any Brexit deal.
The pound last stood at $1.2227 GBP=D4 , up 0.2% for the
day but still not far from Tuesday's five-week low of $1.2196.
The Turkish lira retreated to six-week lows as Turkish
troops, together with their Syrian rebel allies, attacked
Kurdish militia in northeast Syria, opening a fresh chapter in
Syria's eight-year-old civil war.
The lira fell to 5.8777 per dollar TRYTOM=D4 , the lowest
since its flash crash on Aug. 26.
U.S. Treasuries yield slipped back after having risen to
1.594% on Wednesday, pressured partly by this week's heavy bond
supply.
The 10-year Treasuries yield dipped to one basis point to
1.577% US10YT=RR .
The price of front-end Fed funds rate futures gained on
increasing bets on more rate cuts by the U.S. Federal Reserve.
The November contract FFX9 is almost fully pricing in a
0.25 percentage point cut on Oct. 30.
Oil prices also slid on wariness over U.S.-China talks.
Brent crude LCOc1 futures fell 0.15% to $58.23 a barrel while
U.S. West Texas Intermediate (WTI) crude CLc1 lost 0.11% to
$52.53 per barrel.

(Editing by Jacqueline Wong and Simon Cameron-Moore)