GLOBAL MARKETS-Risk on, risk off, repeat! US-China trade deal faces HK hurdle

* European stocks in red on trade deal worries
* U.S. stock futures fall 0.1%, Asia shares down
* Trump seen signing HK bills, looks set to anger Beijing
* Trade deal seen delayed into next year - sources
* China invites U.S. trade negotiators for talks - report
* U.S. bond yield, yuan at 3-week low

By Thyagaraju Adinarayan
LONDON, Nov 21 (Reuters) - Stocks slid further on Thursday
as the standoff between the world's two largest economies
expanded beyond trade, reducing the odds of a "phase-one" deal
this year and forcing investors to shed risky assets.
Investors had widely hoped for a U.S.-China trade deal by
mid-November but the absence of one, and Washington's bill to
support protesters in Hong Kong, has brought progress grinding
to a halt. With U.S. President Donald Trump seen as likely to sign the
bill, Deutsche Bank strategist Jim Reid said this "could risk
progress towards a phase one trade deal".
European shares nevertheless bounced back from day lows in
late morning trade as fresh reports emerged that China has
invited top U.S. trade negotiators for a new round of
face-to-face talks in Beijing.
The trade-sensitive German blue-chip .GDAXI index was down
0.2%, recovering from a 0.7% fall, after the Wall Street Journal
reported Beijing hopes the round of talks can take place before
next Thursday's Thanksgiving holiday in the United States.
U.S. S&P 500 futures ESc1 were marginally down, having
dropped as much as 0.6% in Asian trade. The S&P 500 had hit a
record high as recently as Tuesday on trade deal hopes, but
Washington's move on Hong Kong derailed the rally.
"The cracks in equity market sentiment widened a little
further yesterday, although this setback remains modest in the
context of the index gains enjoyed so far in Q4," said Ian
Williams, economics & strategy research analyst at Peel Hunt.
Trade experts and people close to the White House said
completion of a "phase one" U.S.-China trade deal could slide
into next year, as Beijing presses for more extensive tariff
rollbacks and the Trump administration counters with demands of
its own. Chinese Vice Premier Liu He, also the chief trade
negotiator, said he was "cautiously optimistic" on a phase one
deal, according to a report by Bloomberg.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS fell 1.1% to a near three-week lows, with Hong
Kong's Hang Seng .HSI tumbling 1.6% while Japan's Nikkei
.N225 dropped 0.5%. Chinese mainland shares dropped 0.3%
.SSEC .
Investors who had sought the safety of government bonds, the
yen and gold in early trade shifted back from those positions
after China reportedly invited U.S. negotiators for talks.
"Our short-term strategy remains fairly cautious, as markets
are very narrowly driven -- every positive piece of news in
trade negotiations sends markets higher, while any
disappointment sinks," said Marija Veitmane, Senior Strategist
at State Street Global Markets.
"This makes it very hard for investors to build positions in
risk trades."
Spot gold XAU= reversed gains to trade 0.2% lower at
$1,468.91 per ounce as of 1127 GMT.
German government bond yields DE10YT=RR -- which move
inversely to price -- bounced back from two-week lows, while the
10-year U.S. Treasuries yield rose to 1.7551% US10YT=RR , off
three-week lows touched earlier in the day.
The Chinese yuan meanwhile cut some losses after hitting
three-week lows, and were last trading at 7.0210 to the dollar
CNY=CFXS in onshore trade.
The Japanese yen JPY= , which rallied almost 1% from more
than five-month lows, was flat against the greenback.
The euro gained slightly and was last trading at $1.1083
EUR= ahead of the release of minutes of the European Central
Bank's most recent policy meeting.
Oil prices dipped, paring some of the 2% gains made on
Wednesday after a better-than-expected U.S. crude inventories
report and as Russia said it would continue its cooperation with
OPEC to keep the market balanced.
Global benchmark Brent futures LCOc1 dropped 0.4% to
$62.08. U.S. West Texas Intermediate (WTI) crude futures CLc1
were down 0.4% at $56.73 per barrel in early Thursday trade.

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(Editing by William Maclean and Catherine Evans)