GLOBAL MARKETS-U.S.-China trade truce lifts global stocks, gold falls

(Updates through afternoon U.S. trading)
By David Randall
NEW YORK, July 1 (Reuters) - Global stocks rose and bonds
retreated on Monday as the United States and China agreed to
restart trade talks at the G20 summit over the weekend, leading
investors to bet that a breakthrough between the world's two
largest economies would jumpstart global economic growth.
The United States and China agreed on Saturday to resume
trade negotiations after U.S. President Donald Trump offered
concessions to his Chinese counterpart Xi Jinping when the two
met at the sidelines of the Group of 20 summit in Japan.
Those included no new tariffs and an easing of restrictions
on Chinese tech company Huawei Technologies Co Ltd HWT.UL .
China agreed to make unspecified new purchases of U.S. farm
products and return to the negotiating table. "It played out as well as possible," said Hans Peterson, SEB
Investment Management's global head of asset allocation. "It
gives us time to digest and get a bit better activity in the
global economy."
Broad gains in Europe and Japan pushed MSCI's broadest
global index .MIWD00000PUS up 0.4%, adding to a rally that has
been one of the global stock market's best first halves to a
year ever. The benchmark S&P 500 index briefly surpassed its previous
record high of 2,964.15, set on June 21, before giving back some
gains.
On Wall Street, the Dow Jones Industrial Average .DJI rose
51.59 points, or 0.19%, to 26,651.55, the S&P 500 .SPX gained
13.94 points, or 0.47%, to 2,955.7 and the Nasdaq Composite
.IXIC added 66.85 points, or 0.83%, to 8,073.10.
The Dow had been up more than 200 points in earlier trading.
"Any step toward a trade resolution - and it doesn't have to
be a lot of progress - just a step, is viewed very positively by
markets," said Scott Brown, chief economist at Raymond James in
St. Petersburg, Florida. "And investors at this point are trying
to focus on the positive in hopes that there will be some trade
resolution down the line."
China's CSI300 index .CSI300 of blue-chip stocks jumped
2.6% to their highest since late April and Germany's
export-heavy DAX .GDAXI gained 1.5% to its highest since
August. The Huawei hiatus and M&A activity drove Europe's tech
sector .SX8P to a one-year peak. .EU
Fed funds futures 0#FF: dropped over five ticks as the
market scaled back the probability of a half-point interest rate
cut this month to around 15%, from nearer 50% a week ago.
FEDWATCH
"I think the Fed expectations in the market are very
aggressive; possibly a bit too aggressive," SEB's Peterson said.
In currency markets, safe havens like the yen and Swiss
franc gave up some recent gains. The dollar rose 0.4% on the yen
to 108.26 JPY= and 0.7% on the Swiss franc CHF= to 0.9830
franc. /FRX
The dollar added 0.4% on a basket of major currencies .DXY
to 96.531. The dollar's gains hurt gold, which fell 1.5% to
$1,388 per ounce XAU= . GOL/
Oil prices rose as much as $1 a barrel before giving up some
of their gains after OPEC and its allies looked set to extend
supply cuts at least until the end of 2019. Iraq joined top
producers Saudi Arabia and Russia in endorsing the policy.
O/R
Brent crude LCOc1 futures rose 10 cents, or 0.2%, to
$64.64 a barrel. U.S. crude CLc1 gained 18 cents, or 0.3%, to
$58.65.

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-Global assets in 2019 http://tmsnrt.rs/2jvdmXl
GRAPHIC-Global currencies vs. dollar http://tmsnrt.rs/2egbfVh
GRAPHIC-Emerging markets in 2019 http://tmsnrt.rs/2ihRugV
GRAPHIC-MSCI All Country Wolrd Index Market Cap http://tmsnrt.rs/2EmTD6j
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>