* MSCI world index up 0.2%
* Euro STOXX 600, Asian shares gain 0.3%
* Investors eye limited U.S.-China trade deal
* See chances of no-deal Brexit receding
* Pound hits 5 1/2-month high after recovering losses
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices throughout; adds strategist comment)
By Tom Wilson
LONDON, Oct 21 (Reuters) - World shares rose on Monday, as
hopes for resolving the U.S.-China trade war and a belief that
Britain will avoid a disorderly exit from the European Union
gave investors cause for riskier bets.
MSCI's world equity index .MIWD00000PUS , which tracks
shares in 47 countries, gained 0.2%. The Euro STOXX 600 .STOXX
added 0.4%.
The positive mood in Europe mirrored gains in Asia. There,
MSCI's widest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS rose 0.3%, with Chinese shares .CSI300 gaining
0.3%.
Appetite for riskier assets was also supported as markets
judged the chances of a disruptive no-deal Brexit were receding,
even after Britain's parliament delayed a vote on Prime Minister
Boris Johnson's deal to exit the EU.
Johnson will seek to put his Brexit deal to a vote on
Monday, with the government proposing a debate on the agreement.
Parliament was due to open at 1330 GMT.
It was unclear, though, whether parliament's speaker would
allow a vote to go ahead. The decision should come around 1430
GMT, and any vote could come much later on Monday.
Investors in Asia earlier were boosted by comments on Friday
by Chinese Vice Premier Liu He's comments that Beijing will
collaborate with the United States to address mutual concerns on
the trade war. U.S. President Donald Trump had also struck an optimistic
tone on Friday, saying he thought a trade deal would be signed
before an Asia-Pacific Economic Cooperation meeting in Chile
next month. "They seem to making progress," said Jeremy Gatto, an
investment manager at Unigestion in Geneva. "But we have seen in
the past that everything seems to look great and then a couple
of days later seems to deteriorate again."
The 2020 U.S. presidential election was also influencing the
talks, investors said, with Trump looking to avoid the
possibility of tariffs imposed by China hurting his voters.
"Trump realises that some of the tariffs that potentially
could be implemented towards the end of the year could affect
the consumer, which would be bad for the U.S. economy - and
obviously bad for him," Gatto said.
Wall Street futures NQcv1 EScv1 indicated gains of around
0.3%. U.S. markets are also gearing up for high-profile earnings
reports this week from such companies as Microsoft MSFT.O and
Amazon AMZN.O .
"It's a relatively low bar for U.S. corporates to beat on
earnings for this quarter," said Hugh Gimber, global market
strategist at J.P. Morgan Asset Management.
Market players, he said, were watching out for how slower
economic growth could affect companies' results.
"What will be most important for the market will be whether
or not companies start to guide towards lower earnings
expectations in the next 12 months."
POUND AT 5 1/2-MONTH PEAK
The pound GBP=D3 surged in early London trading to $1.301,
recovering earlier losses of half a percent against the dollar.
Sterling had by Friday risen as much as 6.5% in seven
trading days to a five-month high, underscoring market
expectations that either a Brexit deal or delay was most likely.
By late morning, it was trading at $1.2981.
Goldman Sachs said it now sees the chance of a no-deal
Brexit reduced to 5%, from 10% previously. Still, some investors said that sterling's medium-term
prospects were limited, even if no deal is avoided.
"I wouldn't be too bullish, because there is still going to
be a huge amount of uncertainty going forward, even if the
current deal is agreed," said Tim Drayson, head of economics at
Legal & General Investment Management.
"If this deal does go through, ultimately it is still a
relatively hard Brexit - we are out of the customs union - and
it is still a deterioration in the UK terms of trade."
The dollar index against a basket of six major currencies
fell 0.1% .DXY .
Euro zone bond yields also rose on the dwindling risk of a
British no-deal exit. The benchmark 10-year German government
bond's yield rose as much as 4 basis points to -0.334%
DE10YT=RR . Other yields from the euro zone core were also
higher FR10YT=RR . In commodities, oil prices held steady on Monday, recouping
some early losses. Brent crude oil futures LCOc1 were down 62
cents, or 1%, to $58.80 a barrel by late morning. O/R
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