GLOBAL MARKETS-Stocks rise as U.S.-China phone call boosts optimism, euro gains

(Adds close of U.S. markets)
* MSCI's ACWI less than 2 pts from record high
* Nasdaq, S&P 500 close at new highs
* Oil prices rise on storm-driven output cuts
* German consumer confidence data boosts euro

By Herbert Lash
NEW YORK, Aug 25 (Reuters) - The euro rose on
better-than-expected German business morale data on Tuesday
while global equity markets gained, with the S&P 500 and Nasdaq
setting new closing highs, after a phone call cooled a recent
flare-up in U.S.-China trade tensions.
Gold prices fell as the call, the first formal dialogue
between top U.S. and Chinese trade officials since early May,
bolstered risk sentiment and offset support for bullion from a
weaker dollar.
The officials reaffirmed their commitment to a trade deal
that had appeared on shaky ground because of a slew of issues
rattling bilateral ties, including Beijing's new national
security law imposed on Hong Kong. Trading volume was low - typical for a late August session -
but also as investors await a speech by Federal Reserve Chairman
Jerome Powell on Thursday, when he is expected to address the
U.S. central bank's view on inflation and monetary policy.
Powell may signal a shift in the Fed's inflation target to
an average, which would allow inflation to rise more quickly
than in the past.
A lack of news or single-stock catalyst to drive markets
kept the session quiet, said Yousef Abbasi, global market
strategist at StoneX Group Inc in New York.
"The market's on cruise control until Thursday morning when
Fed Chairman Powell is expected to outline the new monetary
policy and maybe forward guidance framework," he said.
A survey from the Conference Board showed U.S. consumer
confidence unexpectedly fell in August to hit a six-year low.

Stocks retreated to close lower, while Wall Street
meandered. The S&P500 set a new intraday high early in the
session, retreated to trade lower, and then closed at a new high
along with the Nasdaq. .N
Europe's broad FTSEurofirst 300 index .FTEU3 fell 0.32% to
1,434.94, while MSCI's all-country world index .MIWD00000PUS
rose 0.34% to close at 579.20 - less than 2 points from an
all-time peak for the global benchmark reached in February.
Wall Street was mixed. The Dow Jones Industrial Average
.DJI fell 0.21%, the S&P 500 .SPX gained 0.36% and the
Nasdaq Composite .IXIC added 0.76%.
The S&P 500 and the Nasdaq also logged closing highs on
Monday, boosted by signs of progress in developing treatments
and vaccines for COVID-19.
A slide of 0.82% in Apple Inc. AAPL.O , whose market
capitalization of $2.15 trillion is greater than all the
components in the benchmark FTSE 100 .FTSE index in London,
initially kept stocks from rising.
German business morale improved more than expected in August
as both manufacturing and services picked up steam, a survey by
the Ifo institute showed. The survey raised hopes for a strong
recovering from the coronavirus in Europe's largest economy.
The dollar index =USD fell 0.29%, with the euro EUR= up
0.41% to $1.1835.
Longer-term U.S. Treasury yields rose as traders moved into
riskier asset classes on reassurance that a U.S.-China trade
deal would continue. Yields on the benchmark 10-year Treasury
note US10YT=RR rose 0.715% at one point, to later trade up 4.1
basis points to 0.6867%.
Jack Ablin, chief investment officer at Cresset Capital
Management, said there has been a slight upward change in trend
in U.S. interest rates, whose record-low levels have helped lift
Wall Street to all-time highs.
"This market is really keying off interest rates, and as
long as rates stay low, we can stay at these elevated levels,"
Ablin said. Anything to push rates up persistently would likely
lead investors to pare stock holdings, he said.
Euro zone government bond yields rose on the Ifo survey.
Germany's 10-year bond yields DE10YT=RR , a benchmark for
the region, rose 5 basis points to a one-week high of -0.445%.
Crude oil prices rose, supported by production cuts in the
U.S. Gulf Coast as Tropical Storm Laura was forecast to become a
major hurricane, while rising coronavirus cases in Asia and
Europe capped gains.
Brent crude futures LCOc1 settled up 73 cents at $45.86 a
barrel. U.S. crude futures CLc1 rose 73 cents to settle at
$43.35 a barrel.
U.S. gold futures GCv1 settled down 0.8% at $1,923.10 an
ounce.


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