GLOBAL MARKETS-New year cheer for stocks as rally rumbles on

* Asian and European stocks boosted by China stimulus
* China blue chips jump after central cuts reserve
requirement
* Trump says Phase 1 trade deal to be signed Jan. 15.
* Oil inches higher after tensions in Iraq

By Marc Jones
LONDON, Jan 2 (Reuters) - World stock markets began the new
year with a shot of Chinese stimulus, ensuring there was no
immediate hangover after the gains of 2019.
China's central bank said overnight it was lowering how much
cash banks were required to hold, the eighth reduction since
2018. The move that should free around 800 billion yuan ($115
billion) to boost its economy. In addition, U.S. President Donald Trump tweeted that a
long-awaited Phase 1 trade pact with Beijing would be signed on
Jan 15. Europe's main markets .FTSE .GDAXI .FCHI gained 0.4% to
0.8%, following Asia higher in their first trading session of
the new decade. U.S. futures suggested similar gains on Wall
Street, with S&P 500 e-minis ESc1 up 0.4%.
MSCI's broadest index of world shares .MIWD00000PUS added
0.2% to December's 3.3% jump and the 24% gained in 2019.
"Over a longer-term horizon, we believe global stocks have
greater performance potential than global bonds, supported by
continued growth and moderate inflation," Franklin Templeton
said in its 2020 outlook, although it stressed it remained
cautious for now.
Some gloomy euro zone manufacturing PMI data were revised
higher, which pushed up inflation expectations and saw Germany's
15-year bond yield briefly turn positive for the first time
since July. GVD/EUR
"Although firms grew somewhat more optimistic about the year
ahead, a return to growth remains a long way off," said Chris
Williamson, chief business economist at IHS Markit, which
compiles the purchasing manager indices. DALLIES
In currency markets, the dollar rose against major peers,
but the gains were capped amid expectations of a better outlook
for global growth and trade and an end to U.S. economic
outperformance.
The dollar was 0.1% stronger against the yen at 108.81
JPY= . The euro EUR= dropped 0.02% to 1.1208.
After the stimulus in Beijing, China's yuan closed at 6.9631
CNY= , its strongest finish against the dollar since Aug. 2.
The offshore yuan also gained after an initial downward move
CNH=EBS .
The cut in reserve requirements had been expected before
January's Lunar New Year holidays and after Premier Li Keqiang's
pledge last month to provide more stimulus.
China's blue-chip CSI300 index .CSI300 , one of the world's
best performers last year, rose 1.4%, reaching its highest since
Feb. 7, 2018. Hong Kong's Hang Seng .HSI added 1.25%. .SS
Oil prices rose as tensions in the Middle East fuelled
worries about supply. The U.S. military carried out air strikes
against an Iran-backed militia this past weekend. Consequently,
protesters stormed the U.S. Embassy in Baghdad on Wednesday,
then withdrew after the United States deployed extra troops.
U.S. crude CLc1 was up 0.3% to $61.28 and global benchmark
Brent crude LCOc1 rose 0.4% to $66.27 per barrel, building on
a rise that gave oil markets their biggest annual gain in three
years in 2019. Gold, which had benefited from a weaker dollar, was up 0.25%
on the spot market despite the U.S. currency's gains. It last
fetched $1,520 per ounce. XAU= GOL/

($1 = 6.9633 Chinese yuan renminbi)