GLOBAL MARKETS-Europe stocks rally wanes on trade woes, earnings jitters

* European stocks struggle to gain ground after loosing
streak
* Germany's DAX falls 0.3%, FTSE slips 0.1%
* U.S. futures point to stronger open, following Asia lead
* Fed chairman's remarks revive some bets on aggressive rate
cut
* Dollar sags after Powell's comments
* Oil hits six-week highs a Gulf of Mexico faces storm
* Asian stock markets: https://tmsnrt.rs/2zpUAr4

By Karin Strohecker
LONDON, July 11 (Reuters) - Europe's early stocks rally
faded and global bond yields rose after jitters over corporate
earnings and trade doused an early rally fuelled by enthusiasm
over Federal Reserve Chairman Jerome Powell cementing rate cut
expectations.
The pan-European STOXX 600 .STOXX struggled to cling onto
0.1% gains after losing 1.4% over the past four sessions with
Germany's DAX .GDAXI and Britain's FTSE .FTSE down 0.1%
while France's CAC .FCHI hovered just in positive territory.
The automotive sector felt much of the pressure with
large-cap car parts suppliers Valeo VLOF.PA and Continental
CONG.DE tumbling more than 2% following a slew of warnings by
small-cap auto and industrial suppliers < AAGG.DE> SENSI.S .
.EU LIVE/
European markets had rallied initially after Powell, in his
first day of testimony before Congress on Wednesday, confirmed
the U.S. economy was still under threat from disappointing
factory activity, tame inflation and a simmering trade war, and
said the Fed stood ready to "act as appropriate".
However, worries about corporate health as the earnings
season kicks off and the possible opening of a new front in the
trade row between Washington and the European Union saw gains
quickly evaporate.
France's Senate gave final approval to a tax on big
technology companies - many of which are U.S. firms. President
Donald Trump on ordered an investigation into the tax, a step
that could lead to the United States imposing new tariffs or
other trade restrictions.
"We have a U.S. president who has declared his policy is to
be unpredictable, so the overriding feeling is trade war
continues to be a very strong feature of the Trump presidency
... what happens next depends on the next tweet," said Marie
Owens Thomsen at Indosuez Wealth Management.
Yet the gloom seemed confined to Europe for now. U.S.
futures pointed to a stronger opening for Wall Street as well
with E-Minis for the S&P500 ESc1 at 0.2%. Asia had also
chalked up healthy gains, with MSCI's broadest index of
Asia-Pacific shares ex-Japan .MIAPJ0000PUS up 0.8% while
Japan's Nikkei .N225 added 0.5%.
U.S. stocks ended higher on Wednesday and the S&P 500 .SPX
briefly crossed 3,000 points for the first time following
Powell's remarks. .N
Nonetheless, many questioned how much momentum the prospect
of lower interest rates could provide.
"We are in the camp and have been all year, and arguably
wrongly, that the Fed becoming more dovish and cutting rates is
not good for risk assets," said Neil Dwane, global strategist
and portfolio manager at Allianz Global Investors. Nine of 12
Fed rate cutting cycles had not stopped a recession, he noted.
"Given we are in the longest expansion and have only had
rates lifted to 2.5%, for me it begs the question, is a soft
landing possible?"
A strong June U.S. jobs report earlier this month had
heightened expectations the Fed was more likely to cut by 25
basis points than by 50, though Powell's cautious stance helped
fuel bets on heftier easing.
According to CME Group's FedWatch tool, the chance of a 50
basis point cut rose to around 1 in 4 currently from near-zero
ahead of Tuesday for the Fed's next policy meeting on July
30-31.
However, minutes from the Fed's last meeting, in mid-June,
showed some policymakers felt there was not yet a strong case
for easing. The rate cut prospects also weighed on the dollar. The
dollar index .DXY against a basket of six major currencies
slipped 0.24% to 96.876, extending losses for a second straight
session after reaching a three-week peak on Tuesday.
The dollar was down 0.4% at 108.06 yen JPY= , forced off a
six-week high of 108.990 the previous day. It was still some
distance from a six-month trough of 106.780 set on June 25. The
euro EUR= nudged up 0.3% to $1.1283.
In fixed-income markets, the 10-year U.S. Treasury yield
US10YT=RR rose to 2.07%, though still stood below Wednesday's
three-week high of 2.113%.
In commodities, U.S. crude oil futures CLc1 climbed to a
six-week high as oil rigs in the Gulf of Mexico were evacuated
before a storm, while an incident with a British tanker in the
Middle East highlighted ongoing tensions in the region. O/R
U.S. crude oil futures gained 24 cents to trade at $60.67
per barrel. Brent crude LCOc1 futures rose 30 cents to $67.31.
Spot gold XAU= briefly touched $1,426 an ounce, its
highest since July 3, on the reinforced expectations for a Fed
rate cut. GOL/

(Reporting Karin Strohecker; additional reporting by Sujata Rao
and Marc Jones in London, Shinichi Saoshiro in Tokyo; editing by
Larry King)