* European shares, U.S. stock futures higher
* Optimistic comments on trade lift sentiment for now
* Japan's Nikkei touches more than 3-month low
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Dhara Ranasinghe
LONDON, May 14 (Reuters) - World stocks hovered near
two-month lows on Tuesday, although 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.
Fears the United States and China are spiraling into a
fiercer, more protracted trade dispute that could derail the
global economy, has rattled share markets in recent weeks, and
the selloff accelerated on Monday after China announced plans
for retaliatory tariffs.
But the Chinese government's top diplomat said China and the
United States both have the "ability and wisdom" to reach a
trade deal that is good for both. And U.S. President Donald
Trump said he was optimistic about resolving the trade dispute.
That paved the way for a positive start for the European
trading session, with stock markets in London .FTSE , Frankfurt
.GDAXI and Paris .FCHI 0.6% to 0.9% higher, while U.S. stock
futures rallied 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."
China has said it would impose higher tariffs on $60 billion
of U.S. goods in retaliate against a U.S. tariff hike on Chinese
goods. Asian shares took another beating on Tuesday but closed off
their lows, following the more upbeat tone from U.S. and Chinese
officials.
Japan's Nikkei stock index .N225 fell to its lowest since
mid-February, while broader Asian markets were dragged down by a
selloff in Chinese shares .CSI300 .
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell over 1% to its lowest level since Jan 30,
leaving MSCI's world equity index .MIWD00000PUS stuck near its
lowest levels in around two months.
Prakash Sakpal, Asia economist at ING in Singapore, said the
current volatility showed how a "180-degree" turn in U.S.
rhetoric on trade negotiations had spooked markets.
"We don't see any quick end to this state of the markets
until we see some resolution, constructive dialogue and
something very solid in terms of deals. But the hopes for that
are a bit misplaced currently," he said.
Trump has said he would meet with Chinese President Xi
Jinping next month, with focus now turning to an upcoming G20
meeting.
STABILISATION?
Signs of stability in world equity markets took the shine
off safe-haven assets for now.
Yields on 10-year German government bonds were two basis
points higher on the day at minus 0.06% DE10YT=RR and off
six-week lows hit on Monday when investors flooded into safe
havens.
U.S. 10-year Treasury yields US10YT=RR also rose away from
Monday's six-week lows, rising 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, given a sustained inversion of this part of the yield
curve has preceded every U.S. recession in the past 50 years.
The safe-haven yen too lost some ground as the mood
improved, with the dollar strengthening 0.4% against the
Japanese currency to 109.74 JPY= .
The euro EUR= firmed 0.12% at $1.1235. However, China's
offshore yuan CNH=D3 hit a fresh 2019 low in Asian trade
before rebounding to trade at 6.8989 per dollar, up 0.2%.
Its counterpart CNY=CFXS strengthened slightly to 6.8731
per dollar after the four-month lows touched on Monday sparked
speculation Beijing was letting the currency weaken amid the
intensifying trade war.
Oil prices edged up, buoyed by Middle East tensions though
gains were checked by trade war concerns. Brent crude LCOc1
gained 0.07% to $70.28 per barrel.
Gold prices held near one-month highs, trading steady on the
day at around $1,298 per ounce XAU= .