GLOBAL MARKETS-Record stocks stall ahead of U.S.-China trade deal

* Europe stumbles after stocks climb in Asia

* Safe-harbour bonds and yen make ground

* Rand and lira take the pain in emerging markets

* Big banks kick off Wall Street earnings

* World FX rates in 2020 http://tmsnrt.rs/2egbfVh

By Marc Jones

LONDON, Jan 14 (Reuters) - Global markets experienced a

slight bout of weakness on Tuesday as traders cashed in on

recent record highs, awaited a long-anticipated U.S.-China trade

deal and began to digest the first Wall Street earnings of the

new year.

It was smooth sailing in Asia; MSCI's world stocks index set

a new record high after reassuring Chinese data and Washington

had said it no longer deemed Beijing a currency manipulator. But

Europe's session saw the currents turn.

Dealers struggled to put their finger on the exact cause but

London, Frankfurt and Paris all saw an early wobble which left

the regional STOXX 600 .STOXX down as 0.5%, and bonds and

other safe-haven assets suddenly back in demand. GVD/EUR

"You had some good news in terms of China coming off the

list of currency manipulators and so you would have expected

bond prices to extend losses," said Andy Cossor, a rates

strategist at DZ Bank in Frankfurt.

"So, I think it might be a case that people got ahead of

themselves yesterday and are covering short positions."

Wall Street futures weren't look any brighter either. The

S&P 500, Dow and Nasdaq were all expected to open lower, though

quarterly earnings from U.S. banks JPMorgan JPM.N , Citigroup

C.N and Wells Fargo WFC.N were starting to be digested. .N

A number of heavyweight emerging-market currencies were on

the ropes too. The highly-sensitive South African rand hit a

three-week low and Turkey's lira took its biggest tumble since

mid-December as it dropped 0.4%. EMRG/FRX

China's yuan also backed off, having hit its highest level

since July overnight after the U.S. Treasury Department said it

had removed the currency manipulator tag it had imposed on the

country in August. Beijing had done its part by fixing the yuan's official

level at its firmest level in more than five months. It has also

pledged to buy almost $80 billion more of U.S. manufactured

goods over the next two years and more than $50 billion of

energy supplies, according to a source briefed on the trade

deal. The moves coincided with the arrival of a Chinese delegation

in Washington ahead of Wednesday's scheduled signing of the

Phase 1 trade agreement, seen as calming a dispute that has

upended the world economy. "There have been a number of false starts," said Vishnu

Varathan, head of economics at Mizuho Bank in Singapore, of the

expected deal signing.

"The fact that this is really coming to the moment when the

rubber hits the road is the most tangible evidence of traction

in starting to resolve issues."

In contrast to Europe's dip, Japan's Nikkei .N225 had

added 0.7% overnight to hit its highest level in a month.

Australian shares rose by the same margin to close at a record

.AXJO

Hong Kong's Hang Seng .HSI and Shanghai blue chips

.CSI300 also hit multi-month peaks before running out of

steam.

NEW SEASON

In reaction to the pull-back in risk appetite, gold climbed

up off a two-week low although it was still around 0.2% weaker

for the day at $1,543 per ounce. GOL/

Ten-year U.S. Treasury note yields US10YT=RR , the

benchmark for risk-adverse fixed income markets also rallied,

dropping roughly three ticks to 1.835% compared with the 1.863%

they had touched in Asia.

In currency markets, the Japanese yen stabilised near 110

yen-per-dollar, while another safety play, the Swiss franc, hit

its highest level against a lifeless euro since 2017 and rose

0.4% against the dollar. /FRX

In contrast to China, Washington slapped the currency

manipulator tag on Switzerland on Monday.

Besides the expected trade deal, investors are also looking

to U.S. inflation data due at 1330 GMT, with consensus

expectations for it to hold steady at 0.2% in December.

At the beginning of the fourth-quarter U.S. company results

season, JPMorgan posted what looked to be, at first reading, a

better-than-expected rise in quarterly profit, as strong results

at its trading and underwriting businesses offset weakness in

consumer banking.

Consumer lending is expected to propel profits for big U.S.

banks is the results this week, though stress in corporate

lending and uneven capital markets may cast a shadow.

U.S. Treasury drops China currency manipulator label ahead of

trade deal signing White House plans US-China Phase 1 ceremony, still no final

deal text Dec yuan-denominated exports up 9%, imports up 17.7%

Lighthizer says nearly done with translation of China trade

deal businesses hold back, U.S. consumers seen boosting

big banks' profits $12 trillion stocks market rally https://tmsnrt.rs/2tfURfX

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(Additional Reporting by Tom Westbrook in Singapore and Dhara

Ranasinghe in London, Editing by William Maclean and Pravin

Char)