GLOBAL MARKETS-Trade uncertainty stops world stocks in tracks

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* MSCI ACWI flat, set for best month since Jan
* Trump-Xi meeting at G20 in focus
* Dollar set for worst month since start of 2018
* Gold gains

By Ritvik Carvalho
LONDON, June 28 (Reuters) - World shares were steady on
Friday as uncertainty ahead of a meeting on trade between U.S.
President Donald Trump and Chinese President Xi Jinping deterred
traders from making bold directional bets.
After stock markets slipped in Asia, European shares were
marginally higher, with the pan-European STOXX 600 .STOXX
index up 0.08%. Germany's DAX index .GDAXI was the biggest
gainer, up 0.36% percent on the day. .EU
Trump and Xi will meet on the sidelines of a Group of 20
(G20) summit this weekend in Osaka, Japan, for talks that could
help resolve a year-long trade war between China and the United
States, as signs proliferate of rising risks to global growth.
MSCI's All Country World Index .MIWD00000PUS , which tracks
shares in 47 countries, was up just 0.04% on the day.
The index was set to break a three-week streak of gains but
also on course for its best month since January, gaining nearly
6% in June as equities rallied globally on the back of a pivot
towards easier monetary policy from major central banks.
That shift came after a breakdown in trade negotiations
between the United States and China earlier this year, and has
markets betting on an interest rate cut from the U.S. Federal
Reserve as early as the next policy meeting in July.
On Thursday, China's central bank pledged to support a
slowing economy, ahead of the release of data that is expected
to show China's factory activity shrank for a second consecutive
month in June. "Market participants are taking a cautious approach ahead of
this high-level meeting as hopes for a material breakthrough are
low," said Konstantinos Anthis, head of research at ADSS.
"This is a stellar opportunity for the two leaders to find
some common ground and unless they do so, equities will likely
push lower as a prolonged period of tariffs on each other's
exports will take a heavier toll on both economies and global
growth."
Currency markets also reflected caution, with the Japanese
yen JPY= reversing a three-day losing streak against the
dollar. FRX/
The U.S. currency was down 0.1% against a basket of peers
.DXY and set to turn in its worst monthly performance since
the start of 2018. Bets on interest rate cuts from the Fed have
pushed the dollar index down 1.7% this month.
In Asia, MSCI's broadest index of Asia-Pacific shares
outside Japan .MIAPJ0000PUS fell 0.1%. Japan's Nikkei stock
index .N225 ended down 0.29%.
Chinese blue chips .CSI300 fell 0.24% on Friday and Hong
Kong's Hang Seng .HSI lost 0.32%. Australian shares .AXJO
shed 0.71%.
White House economic adviser Larry Kudlow said on Thursday
that Trump had agreed to no preconditions for the meeting with
Xi and is maintaining his threat to impose new tariffs on
Chinese goods.
Kudlow also dismissed a Wall Street Journal report that
China was insisting on lifting sanctions on Chinese telecom
equipment giant Huawei Technologies Co Ltd HWT.UL as part of a
trade deal and that the Trump administration had tentatively
agreed to delay new tariffs on Chinese goods. "I'm not sure the Americans can deliver what the Chinese
want and the Chinese don't want to deliver what the Americans
want," said Greg McKenna, strategist at McKenna Macro, adding
that he sees an "extend and pretend" outcome, in which Chinese
and U.S. officials agree to continue talks, as the most likely
outcome of the weekend meeting.
Regardless of the outcome (of the talks), McKenna said, "we
will not be in a holding pattern on Monday morning."
Elsewhere in Europe, euro zone government bond yields
hovered near record lows in many cases ahead of the release of
inflation data for the bloc.
With the euro zone expected to record inflation of 1.2% for
the month of June when data is released at 1000 GMT on Friday --
well short of the European Central Bank's target of just below
2% -- investors held on to government bonds in early trade.
GVD/EUR
In commodity markets, trade worries continued to weigh on
oil, with U.S. crude CLc1 losing 0.3% to $59.26 a barrel and
global benchmark Brent crude LCOc1 down 0.36% to $66.31 per
barrel. O/R
The weak dollar and uncertainty over global trade saw gold
rebound after dipping below $1,400 per ounce on Thursday. Spot
gold XAU= was last traded at $1,414.15 per ounce, up 0.35%,
but down from earlier highs. GOL/