GLOBAL MARKETS-Upbeat comments from Trump, China halt global equity slide

* European shares, U.S. stock futures higher
* Optimistic comments on trade lift sentiment for now
* Japan's Nikkei touches more than three-month low
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates market action, adds comment, ZEW survey)
By Dhara Ranasinghe
LONDON, May 14 (Reuters) - World stocks held near two-month
lows on Tuesday as slightly more optimistic comments from U.S.
and Chinese officials on trade brought some comfort, a day after
equities suffered their worst selloff so far this year.
Fear the United States and China are spiraling into a
fiercer, more protracted trade dispute that could derail the
global economy has rattled investors in recent weeks. The
sell-off accelerated on Monday after China announced plans for
retaliatory tariffs
But the Chinese government's top diplomat said China and the
United States have the "ability and wisdom" to reach a trade
deal that is good for both. U.S. President Donald Trump said he
was optimistic about resolving the trade dispute. Those signals were enough for now to provide respite to
battered markets.
European shares rebounded from two-month lows with London
.FTSE , Frankfurt .GDAXI and Paris .FCHI 0.5% to 1% higher.
And having tumbled more than 2% on Monday, U.S. stock futures
suggested Wall Street shares were headed for a stronger open
1YMc1 ESc1 .
"The trade war is driving markets at the moment," said Rory
McPherson, head of investment strategy at Psigma Investment
Management in London.
"Markets were prone to a selloff after a good start to the
year on expectations of policy easing from central banks and no
escalation of trade tensions, and it's this latter pillar that
has come away."
Asian shares opened weaker but closed off the lows, thanks
to the more upbeat official tone.
Japan's Nikkei stock index .N225 fell to its lowest since
mid-February. MSCI's index of Asian shares, excluding Japan,
lost 1%, dragged to three-month lows by a selloff in China
.CSI300 .MIAPJ0000PUS .
MSCI's world index .MIWD00000PUS was stuck near its lowest
levels in around two months.
Markus Huber, a trader at City of London Markets, said he
expected a deal that would allow both sides to save face.
"However, I think traders might underestimate the
consequences if there is no deal and furthermore, tough trade
negotiations between the U.S. and the EU are still to follow
later this year, which could spell new turmoil for stocks."
Trump has said he would meet with Chinese President Xi
Jinping during a G20 meeting at the end of June.
Investors' trade war fears have clearly intensified - Bank
of America Merrill Lynch's monthly survey showed equity
allocations falling sharply in May and a record number of funds
saying they were hedged against a sharp stock market fall.
The number of participants who identified trade war as the
main risk for markets rose as well another sign trade tensions are hurting the economic outlook,
Germany's ZEW institute said investors' mood had deteriorated
unexpectedly in May.
Yields on 10-year German government bonds headed back
towards Monday's six-week lows DE10YT=RR after the ZEW data.
U.S. 10-year Treasury yields US10YT=RR , however, edged
away from Monday's six-week lows, thanks to the slightly
brighter tone. They rose back above shorter-dated three-month
bill yields after the yield curve inverted on Monday for the
second time in less than a week US3MT=RR .
That move underscored worries about the economic impact of a
trade war -- a sustained inversion of that part of the yield
curve has preceded every U.S. recession in the past 50 years.
The safe-haven yen lost ground as the mood improved, with
the dollar strengthening 0.4% against the Japanese currency to
109.67 JPY= . China's yuan and the Australian dollar also
regained some poise, with the former breaking a six-day losing
streak CNH=EBS .
Elsewhere, oil prices rose with Brent crude LCOc1 up
around 1% at $71 per barrel. Gold prices slipped 0.25% to
$1.296,44 per ounce XAU= .