GLOBAL MARKETS-Stocks extend record rally, sterling endures rough week

(Adds close of U.S. markets)
* MSCI world, Wall Street indexes set new highs
* Sterling posts worst week since late 2017
* Oil prices slip on day but gain for third week on trade
hopes

By Herbert Lash
NEW YORK, Dec 20 (Reuters) - A year-end rally in global
equity markets extended gains on Friday, helped by data showing
relatively strong U.S. growth, while sterling posted its worst
week in more than two years on concerns over how Britain will
leave the European Union.
The dollar firmed and U.S. Treasury yields rose after the
Commerce Department said gross domestic product increased at a
2.1% annualized rate in the third quarter, as expected, with
consumer spending coming in stronger than previously reported.
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.33% to a record high, while Wall Street's three key
equity indexes also notched new intraday and closing highs.
A preliminary U.S.-China trade deal and the Federal
Reserve's increase of short-term liquidity in the repo market
have allowed risk assets to gain, said Yousef Abbasi, global
market strategist at INTL FCStone Financial Inc in New York.
"The deliverance of Phase One of a trade deal and the Fed
getting ahead of any potential systemic-type issues has cleared
the path for this market to inch higher," Abbasi said. "There
isn't anything that can shift sentiment dramatically."
U.S. President Donald Trump spoke with Chinese President Xi
Jinping and claimed progress on issues from trade to North Korea
and Hong Kong, but China said Xi accused the United States of
interfering in its internal affairs.
The benchmark S&P 500 extended its run of record highs to
seven straight sessions, its longest streak in more than two
years.
The Dow Jones Industrial Average .DJI rose 78.13 points,
or 0.28%, to 28,455.09. The S&P 500 .SPX gained 15.85 points,
or 0.49%, to 3,221.22 and the Nasdaq Composite .IXIC added
37.74 points, or 0.42%, to 8,924.96.
European shares also rallied, with the pan-European STOXX
600 index .STOXX rising 0.80%. Indexes in Frankfurt .GDAXI
and Paris .FCHI made similar gains in thin trading.
Emerging market stocks rose 0.08%.
Overnight in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS added a sliver, having
risen 1.2% so far this week and almost 5% this month.
Some data reminded investors of potential weak spots in the
world economy.
The mood among German consumers deteriorated unexpectedly
heading into January, a survey showed, suggesting that household
spending in Europe's largest economy could weaken at the
beginning of next year. Germany's 10-year government bond yield DE10YT=RR held
steady near six-month highs on rising economic optimism.
The benchmark 10-year Treasury yield US10YT=RR rose 1
basis point to 1.9206%.
Sterling GBP= traded at $1.3004, down 0.02% on the day
after a sharp reversal that left it down 2.4% for the week, its
worst weekly fall since October 2017. Former Prime Minister
Theresa May's leadership was questioned at the time, leading the
pound to drop 2.5%.
Overnight the pound slipped to below $1.30, a dramatic drop
from a 19-month peak of $1.3514 after British Prime Minister
Boris Johnson used his sweeping election victory last week to
revive the risk of a hard Brexit. Johnson won approval for his Brexit deal in Parliament, the
first step toward fulfilling his election pledge to deliver
Britain's departure from the EU by Jan. 31 and setting December
2020 as a hard deadline to reach a trade agreement. The dollar index .DXY rose 0.32%, with the euro EUR=
down 0.4% to $1.1076. The Japanese yen JPY= weakened 0.08%
versus the greenback at 109.47 per dollar.
Oil fell on the day, though prices posted a third straight
weekly gain as the easing of U.S.-Chinese trade tensions has
boosted business confidence and promises future global growth.
Brent LCOc1 settled down 40 cents at $66.14 a barrel,
while West Texas Intermediate crude CLc1 slid 74 cents to
settle at $60.44 a barrel.
U.S. gold futures GCcv1 settled 0.2% lower at $1,480.90 an
ounce.