GLOBAL MARKETS-Europe stocks gain; oil jumps on Middle East tensions

* Oil prices jump on fresh Middle East tensions
* European stocks gain, FTSE up 0.5% as pound softens
* Media report puts 25 bps Fed rate cut expectations back in
play
* U.S. futures point to firmer open
* Gold gains in safe haven bid
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Karin Strohecker
LONDON, July 22 (Reuters) - European stocks struggled higher
on Monday, shrugging off dialled-down expectations for a big
U.S. rate cut this month, while escalating tensions in the
Middle East boosted safe-haven assets and oil prices.
MSCI's broad index of world stocks .MIWD00000PUS slipped
0.2%, pulling further away from the near-year-and-a-half high
reached earlier in June after falls in much of Asia.
.MIAPJ0000PUS
Europe's regional STOXX 600 index .STOXX gained 0.1%,
Germany's DAX .GDAXI and France's CAC .FCHI rose 0.3% and
Britain's FTSE .FTSE jumped 0.5%.
Energy stocks booked the largest gains in Europe after crude
oil prices jumped at least $1 per barrel, on concern that Iran's
seizure of a British tanker last week may lead to disruptions in
the Middle East. O/R
Meanwhile, investors were shunning real estate stocks
.SX86P that would benefit from lower interest rates and
defensive sectors such as utilities .SX6P and telecoms .SKXP
ahead of a big week for earnings.
"Sentiment about company earnings potential appears to be
mixed at best, with some evidence that we might be seeing a bit
of a pickup in economic data, after a slow first half of the
year," said Michael Hewson at CMC Markets.
"The pickup in U.S. economic data last week, as well as
contradictory commentary from Fed officials, appears to be
muddying the waters for investors about the possible reaction
function of the U.S. Federal Reserve at the end of this month
and whether we can expect to see a 25 basis point or 50 basis
point rate cut."
Momentum looked better for the day ahead on Wall Street.
U.S. futures ESc1 NQc1 pointed to a 0.2%-0.4% higher open.
Global stocks rose towards the end of last week after dovish
comments by New York Fed President John Williams boosted
expectations the world's top central bank would lower rates by
50 basis points at its July 30-31 meeting.
They gave back those gains and Wall Street shares fell after
the New York Fed walked back Williams' comments by saying his
speech was not about upcoming policy action.
Hopes for a larger cut were curtailed even more after the
Wall Street Journal reported the Fed was likely to cut rates by
25 bps this month, and may trim further in the future given
global growth and trade uncertainties. The dollar inched higher and U.S. Treasury yields held
steady on the greater likelihood of a shallower rate cut. The
dollar index .DXY gained to 97.169 against a basket of six
major currencies after rising 0.4% on Friday.
The euro EUR= was little changed at $1.1217 after shedding
0.5% on Friday. The dollar edged up 0.12% to 107.82 yen JPY= .
The benchmark 10-year Treasury yield US10YT=RR lingered at
2.0429%.
Still, the broad decline in equity markets limited the rise
in safe-haven Treasury yields.
"A factor which could guide stocks lower this week are
tweets by U.S. President Donald Trump pertaining to trade issues
with China," said Junichi Ishikawa, senior forex strategist at
IG Securities. "Stocks could decline if he continues to make
challenging trade comments directed at China this week."
Trump last week by renewed a threat to impose tariffs on
another $325 billion of Chinese goods, even as hopes grew that
the two sides would soon resume face-to-face negotiations in a
bid to end their year-long trade war. Elsewhere in currencies, the pound edged lower before the
Conservative Party chooses its new leader on Tuesday. The pound
was last down 0.2% at $1.2486 GBP=D3 , having declined 1.6%
against the dollar so far this month. It was also lower against
the euro at 89.890 EURGBP=D3 .
In commodities, Brent crude futures LCOc1 and U.S. crude
futures CLc1 jumped more than $1 dollar to $63.86 and $56.7
per barrel following a 1% jump on Friday.
Iran's Revolutionary Guards on Friday captured a
British-flagged oil tanker in the Strait of Hormuz after Britain
seized an Iranian vessel earlier this month, further raising
tensions along a vital international route for oil shipments.
Spot gold XAU= gained to $1,426.92 an ounce after rising
as high as $1,452.60 on Friday, its strongest since May 2013.