GLOBAL MARKETS-Shares wobble, yuan weakens as global trade talk rattles markets

* U.S. trade war will only make us stronger, China's top
paper
says
* White House delays decision on tariffs on imported cars
* MSCI world index dips, but pares steeper earlier losses
* Sterling weakens as Brexit talks collapse
* China's yuan hits weakest since November

(Updates with opening of U.S. markets; changes dateline,
previous LONDON)
By Lewis Krauskopf
NEW YORK, May 17 (Reuters) - A gauge of global stocks dipped
but erased steeper losses in a volatile session on Friday while
the Chinese yuan weakened as global trade tensions persisted to
hover over financial markets.
Geopolitical concerns also spiked 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
0.15%, but pared steep early losses.
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.
The White House confirmed that President Donald Trump is
delaying a decision for as long as six months on whether to
impose tariffs on imported cars and parts. Germany's economy
minister said the move offers hope that a renewed escalation of
the trade conflict with the European Union could be prevented
for now. Separately, according to media reports, the United States is
close to a deal to remove tariffs on steel and aluminum imports
from Canada and Mexico, which could help the three countries'
trade pact get ratified in the U.S. Congress.
"What's driving the market on a day-to-day basis is the
24-hour news cycle of headlines primarily around U.S.-China
trade relations," said Walter Todd, chief investment officer at
Greenwood Capital Associates in Greenwood, South Carolina.
Wall Street's main indexes erased initial losses to trade
higher.
The Dow Jones Industrial Average .DJI rose 45.33 points,
or 0.18%, to 25,908.01, the S&P 500 .SPX gained 2.71 points,
or 0.09%, to 2,879.03 and the Nasdaq Composite .IXIC dropped
9.10 points, or 0.12%, to 7,888.95.
Shares of Deere & Co DE.N fell 5.0% 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 0.34%.
In currencies, the Chinese yuan fell as far as 6.949 against
the dollar on Friday, its weakest level since Nov. 30.
The dollar index .DXY , which measures the greenback
against a basket of currencies, rose 0.12%, with the euro EUR=
down 0.12% to $1.1159.
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 2/32 in
price to yield 2.3997%, from 2.405% late on Thursday.
U.S. crude CLcv1 rose 0.43% to $63.14 per barrel and Brent
LCOcv1 was last at $72.42, down 0.28% on the day.

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