* 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
By Tom Wilson
LONDON, Oct 21 (Reuters) - World shares nudged higher on
Monday, as hopes for progress towards resolving the U.S.-China
trade war and a belief that Britain will avoid a disorderly exit
from the European Union gave cause for riskier bets.
MSCI's world equity index .MIWD00000PUS , which tracks
shares in 47 countries, gained 0.2%, with the broad Euro STOXX
600 .STOXX adding 0.3%.
The positive mood mirrored gains for Asian stocks. MSCI's
broadest 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 as lowering,
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.
Earlier in Asia, investors were boosted by Chinese vice
premier Liu He's comments on Friday that Beijing will
collaborate with the United States to address mutual concerns on
the trade war. U.S. President Donald Trump had on Friday also struck an
optimistic tone, 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
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 impacting his voting
base.
"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 were looking positive,
too, indicating slim gains of around 0.3%.
Markets were also gearing up for high-profile earnings
reports this week from firms including Microsoft MSFT.O and
Amazon AMZN.O .
POUND TOUCHES 5-1/2 MONTH PEAK
By 0845 GMT, the pound GBP=D3 had surged to $1.301,
recovering earlier losses of half a percent against the dollar.
Sterling had by Friday risen by up to 6.5% in seven trading
days to a five-month high, underscoring market expectations that
either a deal or delay was most likely.
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 against a basket of six major currencies .DXY
was flat.
Bond markets also reacted to Brexit developments, with euro
zone bond yields rising on the receding risk of a British
no-deal exit.
The benchmark 10-year German government bond yield rose 5
basis points to -0.34% DE10YT=RR , while other core euro zone
yields were also higher FR10YT=RR . In commodities, oil prices largely held steady on Monday,
recouping some early losses as investors took stock of global
economic pressures that could impact oil demand.
Global benchmark Brent crude oil futures LCOc1 were down
12 cents to $59.35 a barrel by 0815 GMT. O/R
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