REFILE-GLOBAL MARKETS-World shares gain on flickering trade hopes

(Refiles to fix typos in second paragraph.)
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* European shares open lower; Asian shares gain
* Japanese yen up 0.5%
* Oil gains

By Ritvik Carvalho
LONDON, Aug 27 (Reuters) - World shares gained on Tuesday as
some investors held out hopes for a trade deal between the
United States and China, even though they continued to raise
tariffs on each other last week.
Shares in Asia followed U.S. stocks higher on Monday, after
U.S. President Donald Trump predicted a trade deal with China.
European shares recovered to trade higher after opening lower.
Automakers and Italian stocks boosted the pan-European STOXX
index, which was up 0.3% by midday in London. .EU
Germany's DAX .GDAXI rose 0.4% and France's CAC 40 .FCHI
gained 0.2%. Italy's FTSE MIB .FTMIB rose over 1% on hopes the
country's ruling 5-Star Movement and the opposition Democratic
Party would make a deal to form a new Italian government.
MSCI'S All Country World Index .MIWD00000PUS , which tracks
shares across 47 countries, was up 0.16% on the day.
Wall Street futures last traded flat. ESc1 NQc1
Trump said on Monday that Chinese officials had contacted
their U.S. trade counterparts and offered to resume
negotiations, an assertion that China declined to confirm.
The comments helped temper losses in global markets
after both sides announced new tariffs on Friday.
"Some of the moves we have seen in the summer are exaggerated
because of investors being away," said Ugo Lancioni, managing
director of global fixed income and currency management at
Neuberger Berman.
"Though we are lightly positioned on risk in our portfolios
given the `deal or no deal' situation, whether it is the trade
war, Brexit or Italy, we are wary of a snap-back rally in the
markets."
Lancioni added that investors have been looking for safe
assets such as gold, the Japanese yen and the Swiss franc in
recent months, so some of those assets may be overvalued.
The Japanese yen JPY= , which rallies when markets turn
risk averse, was up 0.3% to the dollar. FRX/
Gold, another safe haven, was 0.3% higher at $1,529.86 per
ounce and just off its gains the day before, which reached its
highest in more than six years. GOL/
In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS was up 0.35% after dropping 1.3%
the previous day. Japan's Nikkei .N225 rose 1%.
The Shanghai Composite Index .SSEC rallied 1.35%, with a
boost from data showing China's industrial companies returned to
profit in July. South Korea's KOSPI .KS11 added 0.4%.
Markets have been quick to rally on any encouraging signs
from trade negotiations between the U.S. and China. However,
tariffs have only escalated between the two countries since
2018, creating uncertainty and curbing growth.
"Although the continued resilience of consumers keeps us
confident in the global economic outlook, we do not see this as
the best environment for taking risk on stocks," said Mark
Haefele, chief investment officer at UBS Global Wealth
Management.
"As a result, we make three changes to our tactical asset
allocation. We remove our overweight to global equities versus
high grade bonds and initiate an underweight to emerging market
stocks versus high grade bonds. Separately, we also adjust our
overweight to select higher yielding emerging market
currencies."
The dollar index .DXY versus a basket of six major
currencies stood at 97.91, falling 0.2%. The euro EUR=EBS was
0.1% higher at $1.1109 after losing 0.4% on Monday.
Oil prices rose. O/R Brent crude futures LCOc1 were up
1.14% at $59.38 per barrel after losing 1% the previous day.
U.S. crude CLc1 rose 1.32% to $54.35 per barrel.