* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Wall St rises but gold, bond demand show safety appetite
* Japanese yen gains on dollar, Oil gains
(Updates prices after U.S. market open, adds commentary,
changes byline, previous dateline London)
By Sinéad Carew
NEW YORK, Aug 27 (Reuters) - Equity indexes on Wall Street
gave up earlier gains on Tuesday amid uncertainty over the
prospects for a U.S.-China trade deal, while demand for U.S.
treasuries and precious metals grew, showing an appetite for
less-risky investments.
Bond market investors showed a cautious picture as the
margin on interest rates on U.S. three-month Treasury bills over
the yields on benchmark 10-year Treasury notes grew to its
widest level since early 2007.
Gold rose as investors sought cover from worries over global
economic growth and trade, while silver latched on to bullion's
rally to breach the $18 an ounce mark for the first time in
nearly two years. The U.S. benchmark S&P 500 .SPX index fell as investors
lost some of the trade optimism that had helped boost overseas
markets.
Stock markets in Asia and Europe had advanced following U.S.
President Donald Trump's comment on Monday that Chinese
officials had contacted their U.S. trade counterparts and
offered to resume negotiations, an assertion China did not
confirm.
"We continue to have concerns about the global economy. The
U.S. President's deal with China is pending and that may be the
rhetoric from the White House as opposed to an actual fact
pointing to negotiation," said Bart Melek, head of commodity
strategies at TD Securities in Toronto.
The pan-European STOXX 600 index .STOXX rose 0.55% and
MSCI's gauge of stocks across the globe .MIWD00000PUS gained
0.20%.
The Dow Jones Industrial Average .DJI fell 84.06 points,
or 0.32%, to 25,814.77, the S&P 500 .SPX lost 7.05 points, or
0.24%, to 2,871.33 and the Nasdaq Composite .IXIC dropped
22.98 points, or 0.29%, to 7,830.75.
In currencies, investors were also sceptical of trade hopes
as the U.S. dollar lost ground to Japan's yen. The Japanese yen
strengthened 0.35% versus the greenback at 105.78 per dollar,
The dollar index .DXY fell 0.07%, with the euro EUR=
down 0.1% to $1.1089.
"Safer bets are outperforming as the dust settles on trade
war developments that left uncertain whether the U.S. and China
would strike a deal anytime soon. Persistent trade uncertainty
is credited with slowing the global economy and leaving it
vulnerable to tipping into recession," said Joseph Manimbo,
senior market analyst at Western Union Business Solutions.
Benchmark 10-year notes US10YT=RR last rose 20/32 in price
to yield 1.4761%, from 1.544% late on Monday.
The yield curve remained inverted with the spread on
interest rates on three-month bills over 10-year yields hitting
its widest level since March 2007. The yield curve often inverts
prior to a U.S. recession.
"The level of stress and volatility is persisting. The
market is not convinced it has found its footing," said Bruno
Braizinha, U.S. rates strategist at Bank of America (NYSE:BAC) Merrill
Lynch. L2N25N0NH
Spot gold XAU= added 1.1% to $1,542.10 an ounce. However,
gold prices were below their Monday high of $1,554.56, a level
which was last seen in April 2013. GOL/
Oil prices rose as investors in the commodity appeared to
latch on to Trump's Monday prediction of a trade deal with
China. U.S. crude CLcv1 rose 0.35% to $53.83 per barrel and Brent
LCOcv1 was last at $58.60, down 0.17% on the day.
The Shanghai Composite Index .SSEC had rallied 1.35%, with
a boost from data showing China's industrial companies returned
to profit in July.