GLOBAL MARKETS-Global stocks bounce fades on grim China data, Italy woes

* Pan-European STOXX 600 .STOXX index slips 0.4%
* U.S. futures point to lower opening
* China industrial output, retail sales fall short of
forecasts
* Oil surge stalls on bigger-than-expected U.S. inventory
build
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Karin Strohecker
LONDON, May 15 (Reuters) - A global equity bounce stemming
from softer rhetoric by U.S. President Donald Trump on the trade
dispute with Beijing waned on Wednesday as grim China data and
fresh Italian debt woes cast a shadow over global markets.
Concerns that the world's top two economies could career
into a fierce and protracted trade war has kept markets on edge
over the past days. Investors had taken some comfort from Trump
calling the trade dispute with Beijing "a little squabble" on
Tuesday and insisting talks had not collapsed. But data from China showing surprisingly weak retail sales
and industrial output growth weighed on markets and added
pressure on Beijing to roll out more stimulus. Adding to the woes are fears over Italy's fiscal situation
after Rome said it was ready to break EU fiscal rules to spur
employment. Italian stocks declined .FTMIB 0.7% to lead European
stocks lower while France's benchmark .FCHI slipped 0.4%. Data
confirming that Germany's economy had returned to growth in the
first quarter cushioned the DAX .GDAXI which
eased 0.2%. London's FTSE .FTSE rose 0.2%.
"Investors had been waiting for data to confirm signs of
stabilisation in the Chinese economy which, in turn, would
bolster expectations that the global economy could start making
a sustainable recovery," said Neil McKinnon at VTB Capital.
"The recent escalation in tariffs makes that more difficult
and can only add to investor risk aversion and increase the risk
of a more prolonged economic downturn."
The souring mood also looked to spill over to Wall Street
with U.S. futures ESc1 pointing to a softer open following
healthy gains in the previous session. MSCI's broadest index of
world stocks traded flat .MIWD00000PUS .
In currency markets, the Australian dollar AUD= - a proxy
of China-related trades - fell to its lowest level in three
months amid the China data fallout.
The dollar held broadly steady at 109.51 yen JPY= , having
pulled away from a three-month low of 109.020 plumbed on Monday
when trade war worries boosted investor demand for the
safe-haven Japanese currency. FRX/
The Chinese yuan was a shade firmer at 6.9056 per dollar in
offshore trade CNH=D4 , having edged away from a five-month
trough of 6.9200 set on Tuesday. The euro remained anchored at
$1.1214 EUR= while the dollar index against a basket of six
major currencies was nearly flat at 97.524 .DXY after gaining
0.2% the previous day.
The pound GBP= remained near a two-week low after Prime
Minister Theresa May's spokesman said late on Tuesday she
planned to put forward her thrice-rejected Brexit deal in early
June to try to secure an agreement on how to extract Britain
from the European Union before the summer holiday.
In commodities, U.S. crude futures fell 1 percent to $61.15
per barrel CLc1 after the American Petroleum Institute (API)
reported a bigger-than-expected build in crude inventory. O/R
U.S. crude inventories rose by 8.6 million barrels in the
week to May 10 to 477.8 million, compared with analysts'
expectations for a decrease of 800,000 barrels. Brent crude LCOc1 lost 0.6% to trade at $70.38 per barrel.
Brent and U.S. crude futures had surged the previous day
after top exporter Saudi Arabia said explosive-laden drones
launched by a Yemeni-armed movement aligned to Iran had attacked
facilities belonging to state oil company Aramco.