* U.S., China seen nearing truce in trade war
* Strong U.S. jobs data underpin optimism on economy
* Yuan at highest since mid-August after PBOC cut
* European shares steady at 21-month high
* Bond yields rising globally as recession fears recede
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Marc Jones
LONDON, Nov 5 (Reuters) - World shares climbed back towards
record highs on Tuesday, as hopes that Washington may roll back
some of the tariffs it has imposed on Chinese imports rekindled
optimism on the global economic outlook.
A year-end rally looked to be building. Wall Street is on
course for its best year since 2013, with gains of more than
20%, and MSCI's all-country index just 1.5% shy of its record
peak after advancing for a ninth day in 10.
Europe's main markets saw a comparatively subdued start,
after reaching a 21-month high on Monday .EU , but Asia raced
to its highest in six-months, China's yuan climbed above 7 per
dollar and global bond yields were rising again.
Hopes of a trade truce between the United States and China
this month fuelled the optimism, with some more details being
filled in on what's expected to be a "phase one" agreement.
As part of this agreement, China is pushing U.S. President
Donald Trump to remove more tariffs imposed in September,
according to overnight reports. Beijing and Washington spoke of
progress in the talks and U.S. Commerce Secretary Wilbur Ross
said licenses for U.S. companies to sell components to China's
telecoms giant Huawei will come "very shortly".
"The big picture is that everyone is now setting themselves
up for the strong rebound case (for the global economy)," said
Peter Garnry, Saxo Bank's head of global equities . "And with
the flood gates open for monetary policy, assets are just
flying, especially equities."
Global readings of the October manufacturing business
surveys showed the aggregate ticked up for the third month in a
row last month to show an expansion in factory activity.
Forward-looking indicators from the survey, such as the new-
orders component, moved into positive territory for the first
time since April, according to JPMorgan.
It all helped ease concern in bond markets about recession
risks facing the global economy, sparking a selloff across major
bond markets.
The 10-year U.S. Treasury yield rose 4 basis points to
around 1.83% US10YT=RR and the U.S. yield curve -- measuring
the gap between two- and 10-year yields -- was at its steepest
in three months US2US10=TWEB .
In Europe, 10-year yields on safe-haven German Bunds also
climbed to their highest since July DE10YT=RR .
In Asia, the mood was also helped by the People's Bank of
China cut in its a medium-term lending rate, the first since
early 2016. It was only a token 5 basis points to 3.25%, but
analysts said it underscored Beijing's ongoing desire to support
its economy.
MSCI's broadest index of Asia-Pacific shares outside Japan
.MIAPJ0000PUS gained 0.5% to reach levels last seen in early
May. It was led by gains in Chinese shares .CSI300 , which
jumped 1.3% to their highest levels since late April.
Taiwanese shares .TWII gained 0.4% to near three-decade
highs and Japan's Nikkei .N225 rose 1.34% to a one-year peak
after a market holiday on Monday.
That followed record closing highs for the U.S. S&P 500, Dow
Jones and Nasdaq and after the Financial Times had reported that
the U.S was considering rolling back levies on $112 billion of
Chinese imports, which were introduced at a 15% rate on Sept. 1.
China is pushing U.S. President Donald Trump to remove more
tariffs as part of a U.S.-China trade deal, expected to be
signed later this month, people familiar with the negotiations
said on Monday. "There may have been some expectations that the U.S. may
postpone the remaining tariffs, which are due to kick in on Dec.
15. But if it goes further by rolling back existing tariffs,
that would not only benefit the economy but would also make the
truce seem more permanent," said Yukino Yamada, senior
strategist at Daiwa Securities.
The next focus on the U.S. economic front is a U.S.
non-manufacturing survey due later on Tuesday, with economists
expecting a rebound in business sentiment from a three-year low.
Saxo Bank's Garnry said a better-than-expected reading could
fire markets higher.
YUAN RECLAIMS KEY LEVEL
In the currency market, the dollar gained 0.2% on the yen to
108.80 JPY= , extending its recovery from the 107.89 touched on
Friday.
Trade optimism kept the Chinese yuan near its highest levels
since mid-August, after the onshore yuan posted its strongest
close since Aug. 2. CNY=CFXS . The euro was little changed at $1.1126 EUR= , off last
week's high of $1.1175. The Australian dollar gained 0.2% to
$0.6900 AUD=D4 on the trade hopes and after the nation's
central bank held interest rates steady after three cuts this
year.
Oil prices gained, staying near their highest since late
September, buoyed by an improved outlook for crude demand as
better-than-expected U.S. jobs growth added to the hopes for a
U.S.-China trade deal.
U.S. West Texas Intermediate (WTI) crude CLc1 traded at
$56.62 per barrel, up 0.14% after reaching a six-week high of
$57.43 on Monday. International benchmark Brent LCOc1 gained
0.23% to $62.27 per barrel.
Rising economic optimism dented gold, which fell 0.47% to
$1,503 per ounce XAU= .
U.S. non-manufacturers ISM index https://tmsnrt.rs/2JMLMjB
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