GLOBAL MARKETS-Brexit deal fuels sterling while economic optimism bolsters stocks

* Brexit trade deal buoys sterling, European stocks
* Investors wind down for Christmas break in bullish mood
* Graphic: 2020 asset performance http://tmsnrt.rs/2yaDPgn
* Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

(Updates with trading in U.S. markets, adds commentary)
By April Joyner
NEW YORK, Dec 24 (Reuters) - The British pound rose on
Thursday as Britain and the European Union clinched a free trade
deal, while a global gauge of stocks edged upward amid investor
optimism toward economic growth.
Britain hammered out the final details of a narrow agreement
with the EU just seven days before it exits the trading bloc.
Sterling GBP=D3 momentarily extended its climb against the
dollar on the news, rising as much as 0.94%, but then pared
gains. Analysts said the pound's 5% rally since early November
meant that much of the Brexit relief had already been priced
into the currency. Still, the pound was last up 0.35% at $1.3547 on Thursday.
"What was billed as an oven-ready deal has taken a nearly a
year to defrost, but the fact it now seems so much more
palatable for both sides is providing some much needed Christmas
cheer for investors," said Susannah Streeter, senior investment
and markets analyst at Hargreaves Lansdown.
The trade deal helped European equities edge higher as well.
The STOXX index .STOXX rose 0.13%.
U.S. stocks also advanced slightly in thin volume ahead of
the Christmas holiday as investors maintained hopes of economic
recovery, despite blocked attempts in Congress to alter a $2.3
trillion coronavirus aid and government spending package.
President Donald Trump had previously stated that he might not
sign the bill without significant changes. Optimism about a full-scale roll-out of COVID-19 vaccines
next year has kept stocks buoyed despite the delays in further
stimulus, said Arnim Holzer, macro and correlation defense
strategist at EAB Investment Group. Moreover, he added,
investors still expect greater fiscal stimulus to come under
President-elect Joe Biden next year.
"The first thing to recognize is that this is not a
full-blown stimulus," he said. "It's really a stop-gap measure.
President-elect Biden has stated we still have more work that
needs to be done."
The advances in U.S. and European stocks, along with
previous gains in Asia, helped send MSCI's world equity index
.MIWD00000PUS 0.09% higher.
On Wall Street, the Dow Jones Industrial Average .DJI rose
45.09 points, or 0.15%, to 30,174.92, the S&P 500 .SPX gained
6.52 points, or 0.18%, to 3,696.53, and the Nasdaq Composite
.IXIC added 25.72 points, or 0.2%, to 12,796.84.
Trading in U.S. stocks and bonds will end early on Thursday,
and the markets will be closed on Friday for Christmas.
Among currencies, the dollar index =USD shed earlier
losses to edge 0.02% higher as the pound cut its gains. The euro
EUR=EBS dipped 0.00% to $1.2187.
U.S. Treasury yields dropped in light volume. Benchmark
10-year Treasury notes US10YT=RR last rose 7/32 in price to
yield 0.933%, from 0.955% late on Wednesday. Oil prices likewise fell, though Brent LCOc1 remained
above $50 a barrel as a drop in U.S. stockpiles spurred demand
hopes. Brent and U.S. crude CLc1 edged down less than 1%.
Gold prices XAU= rose slightly as sterling kept the
dollar's gains in check. Spot gold XAU= added 0.3% to
$1,877.45 an ounce. Copper CMCU3 prices dipped but remained near their highest
levels since 2013, while other industrial metals rose.