(Adds close of U.S. markets)
* China says trade deal would see tariffs removed in phases
* Wall Street sets intraday record highs
* European stocks at a more than 4-year high
* Safe-haven bonds, gold sag as market optimism returns
* Dollar gains against safe-haven Japanese yen, Swiss franc
By Herbert Lash
NEW YORK, Nov 7 (Reuters) - Oil prices rose and stocks
rallied worldwide on Thursday after China said it had agreed
with the United States to cancel tariffs in phases, a key
consideration in reaching a deal to end a trade war that has
crimped economic growth and roiled markets.
But U.S. stocks pared some gains after Reuters reported
rolling back existing tariffs as part of a trade deal faces
fierce opposition at the White House and from outside advisers,
multiple sources familiar with the talks said. The Dow and S&P 500 closed at record highs, while the Nasdaq
missed a record close by less than two-tenths of a point.
A gauge of global equity performance surged to a 21-month
peak, with a pan-European index at its highest since July 2015
after regional shares rose for a fifth straight session.
The dollar gained after comments from a Chinese commerce
ministry spokesman about the terms of a potential trade deal
prompted investors to dump perceived safe havens such as the
Japanese yen, the Swiss franc, bonds and gold. No timetable was indicated, but a "phase one" deal is widely
expected to include a U.S. pledge to scrap tariffs scheduled for
Dec. 15 on about $156 billion worth of Chinese imports,
including cellphones, laptop computers and toys.
However, the idea of a tariff rollback was not part of the
original October "handshake" deal between Chinese Vice Premier
Liu He and U.S. President Donald Trump, sources told Reuters.
The initial news from China was positive, said David Kelly,
chief global strategist at JPMorgan Funds in New York. But with
operating earnings lower in a slowing economy, "the fundamental
justification for this market increase is pretty weak."
Investors have few options outside of equities, with the
return in money markets and long-term government debt below the
rate of inflation, Kelly said. The economy is generating plenty
of wealth but it is all going to the stock market, he said.
"The real driver (of the rally) is that investors in the
United State and around the world have got little alternatives
available to them because of the actions of the central banks,"
Kelly said, "so they're funneling money into stocks."
MSCI's gauge of stocks across the globe .MIWD00000PUS
gained 0.28%, while the pan-European STOXX 600 index .STOXX
closed up 0.37%. Trade-sensitive German shares .GDAXI rose
0.83% to close at their highest since February 2018.
Asia had been quiet overnight, with the China news arriving
just before European markets opened. Automakers .SXAP and
miners .SXPP were among Europe's top gainers.
The prospect of a recession diminishes if some tariffs are
removed, said Peter Cardillo, chief market economist at Spartan
Capital Securities in New York. "So that's positive for stocks."
On Wall Street, the Dow Jones Industrial Average .DJI rose
182.24 points, or 0.66%, to 27,674.8. The S&P 500 .SPX gained
8.4 points, or 0.27%, to 3,085.18 and the Nasdaq Composite
.IXIC added 23.89 points, or 0.28%, to 8,434.52.
The global benchmark for crude climbed above $62 a barrel.
Brent crude LCOc1 settle up 55 cents at $62.29 and West Texas
Intermediate CLc1 added 80 cents to settle at $57.15 a barrel.
The dollar rose to near three-month highs versus the yen on
the trade news, paring losses earlier in the session, while
Australia's China-sensitive dollar hit a near four-month high.
The dollar index .DXY rose 0.18%, with the euro EUR=
down 0.15% to $1.1048. The yen weakened JPY= 0.25% versus the
greenback at 109.27 per dollar, while the dollar gained against
the Swiss currency CHF= , trading up 0.22% at 0.9948 franc.
U.S. Treasury yields rose to eight-week highs.
The benchmark 10-year U.S Treasury note US10YT=RR fell
31/32 in price to push its yield up to 1.919%.
U.S. gold futures GCcv1 settled down 1.8% at $1,466.40 an
ounce.
Copper got its customary lift from the China optimism as the
country is the biggest buyer of the metal.
"Global markets in general are looking toward where trade
goes," said Justin Lederer, an interest rates strategist at
Cantor Fitzgerald in New York. "The market is being dictated by
headlines and it's risk on, risk off."
Asia stock markets https://tmsnrt.rs/2zpUAr4
Asia-Pacific valuations https://tmsnrt.rs/2Dr2BQA
World stocks surge $10 in 2019 https://tmsnrt.rs/2JRIM5J
German yields https://tmsnrt.rs/36JT6GA
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