GLOBAL MARKETS-Shares rally, bond yields rise as China fuels trade deal hopes

* Italian 10-year bond yields hit record low
* Yields on U.S., German bonds rise as stocks advance
* Argentina peso recovers from tumble on plan to reprofile
debt
* Gold, silver ease from highs

(Updates to mid-afternoon in U.S. markets)
By April Joyner
NEW YORK, Aug 29 (Reuters) - U.S. and European shares
advanced on Thursday as China struck a hopeful tone on trade
relations with the United States and as Italy appeared close to
forming a new government and resolving its political crisis.
Wall Street stocks jumped more than 1% after China's
commerce ministry said Beijing and Washington were discussing
the next round of face-to-face talks scheduled for September.
The comments spurred hopes for progress in the
talks and boosted the Chinese yuan, which snapped a 10-day
losing streak.
Stocks have been whipsawed over the past few weeks as trade
rhetoric between the United States and China has ranged from
combative to conciliatory. On Friday, China unveiled retaliatory
tariffs on $75 billion of U.S. goods, and U.S. President Donald
Trump said he would tack an additional 5% duty onto $550 billion
of Chinese goods.
"If there's promise that they might be able to negotiate and
that tariffs will not be implemented right away, that's good
news," said Paul Nolte, portfolio manager at Kingsview Asset
Management in Chicago.
European shares ended more than 1% higher after Italy's
president asked former Prime Minister Giuseppe Conte to return
to head up a new coalition of the anti-establishment 5-Star
Movement and the opposition centre-left Democratic Party.
The coalition is a step toward resolving a three-week
political crisis triggered after League leader Matteo Salvini
pulled his hard-right party out of its governing alliance with
5-Star. Italian stocks .FTMIB rose nearly 2% and the country's
government bonds also rallied, with yields on 10-year bonds
hitting a record low. U.S. Treasury yields, however, moved off recent lows as
stocks rose. Data showing second-quarter U.S. gross domestic
product growth in line with consensus estimates and weak results
at a $32 billion auction of seven-year government notes also
bolstered bond yields. Among currencies, Argentina's peso ARS= rebounded after
sinking more than 3% earlier in the day on the country's plans
to extend the maturities on some $100 billion of its debt. The
peso was last up 0.14% at 57.86 per dollar. On Wall Street, the Dow Jones Industrial Average .DJI rose
328.53 points, or 1.26%, to 26,364.63, the S&P 500 .SPX gained
37.07 points, or 1.28%, to 2,925.01 and the Nasdaq Composite
.IXIC added 116.32 points, or 1.48%, to 7,973.21.
The pan-European STOXX 600 index .STOXX rose 1.04% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.93%.
Benchmark 10-year Treasury notes US10YT=RR last fell 15/32
in price to yield 1.5164%, from 1.468% late on Wednesday.
The dollar index .DXY , tracking it against six major
currencies, rose 0.29%, while the euro EUR= was down 0.21% to
$1.1054.
The Japanese yen weakened 0.48% versus the greenback at
106.64 per dollar. Sterling GBP= was last trading at $1.2175,
down 0.28% on the day.
In offshore trading, the Chinese yuan CNH= was last 0.33%
higher at 7.1451 per dollar. Among commodities, spot gold XAU= last fell 1.09% to trade
at $1,522 per ounce. Silver also eased 1.04% to $18.14 an ounce
after hitting its highest level in more than two years.
U.S. crude extended its gains from Wednesday on data showing
a sharp fall in U.S. inventories, with the approach of Hurricane
Dorian toward Florida also raising concerns that offshore
producers may slow output if the storm passes into the Gulf of
Mexico. U.S. crude CLc1 settled 1.67% higher at $56.71 a barrel,
while Brent LCOc1 settled at $61.08 a barrel, up 0.98%.