GLOBAL MARKETS-Vaccine optimism tempered by Brexit, stimulus uncertainty

(Adds Wall Street open, updates prices; changes dateline;
previous MILAN)
* Wall Street posts modest gains
* Dow Jones Industrial Average up 0.4%; S&P 500 up 0.6%
* Rising COVID-19 infections, lockdowns temper sentiment
* Pound stabilizes after Brexit deal hopes rebound
* U.S. Treasury yields tick up
*

By Matt Scuffham
NEW YORK, Dec 15 (Reuters) - Global stock markets posted
modest gains on Tuesday, with optimism fueled by vaccine
roll-outs tempered by uncertainty over ongoing talks on Brexit
and more U.S. fiscal stimulus, while currencies traded within
tight ranges.
Investors were on tenterhooks as London and Brussels
continued to debate a trade deal after months of inconclusive
discussions. They were also watching the Federal Reserve's last
policy meeting of the year, which ends on Wednesday.
The Dow Jones Industrial Average .DJI rose 74.48 points,
or 0.25 percent, to 29,936.03, the S&P 500 .SPX gained 19.28
points, or 0.53 percent, to 3,666.77 and the Nasdaq Composite
.IXIC added 89.07 points, or 0.72 percent, to 12,529.11.
Europe's broad FTSEurofirst 300 index .FTEU3 added 0.06
percent, at 1,514.21. The MSCI world equity index
.MIWD00000PUS , which tracks shares in 49 nations, rose 2.42
points, or 0.38 percent, to 631.26.
The number of coronavirus deaths in the United States
exceeded 300,000 on Monday as the hardest-hit nation started its
first vaccine inoculations, while tighter COVID-19 restrictions
were imposed on London. Other countries across Europe were also set to impose new
restrictions during the holiday season to limit the contagion.
Germany adopted a stricter lockdown on Sunday.

"Much of Europe will have to weather tighter restrictions
until at least early to mid-January. Q4 will be lost quarter for
growth, but that should surprise no one," said AFS analyst Arne
Petimezas in Amsterdam.
"Markets remain bifurcated, with the solid post-vaccine
advances for equities, credit and commodities intact. Bond
yields refuse to budge though, and in particularly euro zone
government bond yields remain terribly depressed," he said.
Positive news on vaccines, along with a market-friendly
outcome of the U.S. presidential election that has bolstered
hopes of greater fiscal stimulus, have powered gains over the
last few weeks, lifting shares to record highs.
A $908 billion COVID-19 relief plan in the United States
will be split into two packages in a bid to win approval, a
source said on Monday. Lawmakers hope to attach the aid to a
government funding measure that needs to be done by Friday.
BACKDROP'
Last week, the United States authorized the emergency use of
its first COVID-19 vaccine, developed by Pfizer and BioNTech.
The vaccine has already been authorized in several countries,
including Britain and Canada.
"The start of vaccine approvals and distribution heightens
our confidence in strong global growth in 2021. Combined with
supportive policy and a fresh decline in U.S. real yields, this
remains a friendly backdrop for cyclical and risky assets," said
Goldman Sachs strategists.
"With the vaccine announcements behind us, and a sizable
market response, it makes more sense to look for areas that have
under-reflected the coming recovery," they added.
In foreign exchange markets, the pound rose but remained
below Monday's peak on growing optimism about the chances of
post-Brexit trade deal. However, volatility gauges pointed to
further turbulence ahead as a Dec. 31 deadline on agreement
approached.
It was last 0.3% up at $1.3363 GBP=D4 after reaching a
two-and-a-half-year high earlier this month. The euro EUR= was last up 0.12 percent, at $1.2157
$1.2157. The dollar =USD traded near two-and-a-half-year lows
as demand for the safest assets waned and investors eyed
developments in the U.S. stimulus talks. USD/
The dollar index .DXY , which tracks the greenback versus a
basket of six currencies, fell 0.065 point or 0.07 percent, to
90.646.
The yen JPY= was last down 0.31 percent, at $103.7100.
Longer-term U.S. Treasury yields were slightly higher on
Tuesday as U.S. central bank officials began a two-day meeting
and investors watched for progress on spending negotiations in
Washington.
The benchmark 10-year yield US10YT=RR was up 1.4 basis
points in morning trading at 0.9047%.
"For once, there is a bit of uncertainty on the outcome" (of
the Fed's meeting), said Giuseppe Sersale, strategist at
Anthilia in Milan. "The pandemic's fury and some weakening in
macro data are seen as good reasons to take action. Personally I
don't believe (the Fed has) reasons to change the current
stance."
Spot gold prices XAU= rose $22.3201 or 1.22 percent, to
$1,849.49 an ounce.
Brent crude LCOc1 for February delivery was last up $0.46,
or 0.91 percent, at $50.75 a barrel. U.S. crude CLc1 was last
up $0.63, or 1.34 percent, at $47.62 per barrel.