GLOBAL MARKETS-Fresh trade uncertainty rattles stocks, hits yuan

* Trade talks between U.S. and China have stalled - CNBC
* MSCI world stock index drops; Wall St slides late
* Sterling falls as Brexit talks collapse
* China's yuan hits weakest since November
* U.S. consumer sentiment robust before escalation of trade
war

(Updates with close of U.S. trading)
By Lewis Krauskopf
NEW YORK, May 17 (Reuters) - A major global stocks index
fell on Friday and the Chinese yuan weakened as financial
markets were again jostled by uncertainty over global trade
tensions.
Geopolitical concerns also deepened on news that talks
regarding Britain's split with the European Union had faltered,
putting pressure on the British pound.
MSCI's gauge of stocks across the globe .MIWD00000PUS shed
0.59%.
"Markets are priced so close to perfection that it really
doesn't take very much of a wobble to any of the bull narratives
to catalyze moves in the market, and I think that's what we're
seeing with the trade headlines," said Pete Cecchini, chief
market strategist with Cantor Fitzgerald.
Markets reacted to a litany of trade-related developments.
In China, the Communist Party's People's Daily wrote in a
front-page commentary that the U.S. trade war will only make
China stronger and will never bring the country to its knees.
It was the latest salvo in the trade conflict that has
involved tit-for-tat tariffs on imports involving the world's
two largest economies. Recent tensions caught some investors off
guard after they had expected a near-term resolution to the
months-long trade dispute.
Indeed, U.S. stocks moved lower late on Friday after CNBC
reported talks between the United States and China have stalled.
"In terms of figuring out what is going on between China and
the U.S., I don't know when there will be a resolution there,"
said Jen Robertson, associate portfolio manager with Wells Fargo
Asset Management in London.
The Dow Jones Industrial Average .DJI fell 98.68 points,
or 0.38%, to 25,764, the S&P 500 .SPX lost 16.79 points, or
0.58%, to 2,859.53 and the Nasdaq Composite .IXIC dropped
81.76 points, or 1.04%, to 7,816.29.
Markets appeared to get a lift earlier in the session as the
United States and Canada announced a deal to remove tariffs on
Canadian steel and aluminum in exchange for new curbs to keep
dumped metals from China and other countries out of the U.S.,
paving the way for a similar pact with Mexico. U.S. consumer sentiment jumped to a 15-year high in early
May amid growing confidence over the economy's outlook, but much
of the surge was recorded before an escalation in the U.S.-China
trade war, which could hurt activity. Shares of Deere & Co DE.N fell 7.7% after the agriculture
equipment maker cut its full-year outlook, as the trade war
threatens to hit farm incomes further. The pan-European STOXX 600 index .STOXX lost 0.36%.
In currencies, the Chinese yuan fell as far as 6.949 against
the dollar CNH= on Friday, its weakest since Nov. 30.
The dollar index .DXY , which measures the greenback
against a basket of currencies, rose 0.17%, with the euro EUR=
down 0.16% to $1.1154. Concern about next week's European
parliamentary elections dented demand for the euro. Sterling hit a four-month low after cross-party Brexit talks
collapsed and concern grew about the impact Prime Minister
Theresa May's likely resignation would have on Britain's exit
from the European Union. German bond yields DE10YT=RR fell back toward 2-1/2-year
lows following the escalating trade tensions and collapse of
Brexit talks. U.S. Treasury yields fell as traders sought safe-haven
assets. Benchmark U.S. 10-year notes US10YT=RR last rose 3/32 in
price to yield 2.3944%, from 2.405% late on Thursday.
U.S. crude CLcv1 settled down 0.2% at $62.76 a barrel, and
Brent LCOcv1 settled at $72.21 a barrel, down 0.6%.

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