* Wall Street follows Europe, China higher
* Dollar firm near 2 1/2-month lows
* U.S. yield curve flattens after data shows inflation
pressure
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices after U.S. market open, adds commentary,
changes dateline, previous LONDON)
By Sinéad Carew
NEW YORK, June 11 (Reuters) - Stock indexes around the world
gained on Tuesday as investors piled into riskier assets as they
bet on Federal Reserve interest rate cuts and that a U.S.-China
trade agreement could follow the U.S.-Mexico deal.
In commodities trading, oil prices rose while gold came
under pressure as investors turned to stocks.
Wall Street followed Europe higher after a surge in
Frankfurt's DAX on the return of German and Swiss investors
from an extended holiday weekend. Earlier, China's stocks rose
on Beijing easing financing rules to boost local government
spending on public works and expectations of lower central bank
rates globally.
While some investors were still jumping into a rally sparked
by a U.S.-Mexico trade and immigration agreement reached on
Friday, others were looking ahead to the June 18-19 Fed meeting
and expectations of trade talks between the United States and
China leaders later in the month.
"The market is looking for the Fed to give an indication
next week that it's going to cut rates in July," said Bruce
Bittles, chief investment strategist at Robert W. Baird & Co in
Sarasota, Florida.
"The fact the administration was able to strike a deal with
Mexico cleared up that picture and gave an indication it's
willing to negotiate with China later this month... whether that
happens is another thing."
But Bittles was cautious about the sustainability of Wall
Street's current advance, noting that past rallies on trade news
have often petered out after a day and a half.
The Dow Jones Industrial Average .DJI rose 58.33 points,
or 0.22%, to 26,121.01, the S&P 500 .SPX gained 5.92 points,
or 0.21%, to 2,892.65 and the Nasdaq Composite .IXIC added
14.99 points, or 0.19%, to 7,838.15.
The pan-European STOXX 600 index .STOXX rose 0.76% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.43%.
Emerging market stocks rose 0.96%. MSCI's broadest index of
Asia-Pacific shares outside Japan .MIAPJ0000PUS closed 1.08%
higher, while Japan's Nikkei .N225 rose 0.33%. The Shanghai
composite index .SSEC closed up 2.6%.
FLATTER YIELD CURVE
In U.S. Treasuries trading, 2-year yields rose more quickly
than 10-year yields, flattening the yield curve after Labor
Department data showed rising producer prices in May for the
second consecutive month, pointing to a steady pick-up in
inflation pressure. An increase in prices could temper bets for
rate cuts as the Fed uses rate hikes to contain inflation.
Benchmark 10-year notes US10YT=RR last fell 5/32 in price
to yield 2.1587%, from 2.141% late on Monday.
With fears easing that the United States would launch a
trade war with Mexico, investors appeared to shrug off President
Donald Trump's threat to impose more tariffs on China if no
progress was made in talks with President Xi Jinping. They are
expected to meet at a Group of 20 summit on June 28-29.
Gold prices dipped as investors booked profits following
robust gains over the past weeks, and demand for safe-haven bets
waned due to hopes for a U.S.-China trade deal.
Spot gold XAU= dropped 0.2% to $1,325.34 an ounce.
In currency markets, the U.S. dollar index was flat as
investors focused on the U.S.-China trade war and economic data
for signals of growth and whether the Fed is likely to cut rates
in the coming months. The dollar index .DXY rose 0.03%, with the euro EUR= up
0.03% to $1.1315.
Oil futures rose as firmer equities and expectations OPEC
and its allies will keep withholding supply countered concern
about slowing economies and demand. U.S. crude CLcv1 rose 0.69% to $53.63 per barrel.