(Updates through close of U.S. trading)
By David Randall
NEW YORK, Nov 2 (Reuters) - Concerns that a trade deal between the United States and China may not be imminent reined in a rally in world equity markets and reversed gains on Wall Street on Friday, while strong U.S. wage growth boosted U.S. bond yields.
Markets had earlier climbed on hopes that the world's two biggest economies were mending their shaky trade relations.
A steep decline in shares of Apple Inc further weighed on sentiment in the U.S. stock market after the iPhone maker warned that sales during the crucial holiday quarter would likely miss expectations.
White House economic adviser Larry Kudlow told CNBC that while President Donald Trump plans to meet Chinese President Xi Jinping later this month, he has not asked U.S. officials to draw up a proposed trade plan, contradicting a report earlier in the day that had buoyed hopes of a trade dispute resolution.
That erased early gains in U.S. stocks and curtailed a rally in global markets that had lifted emerging market stocks by their largest daily gain since 2016.
"The stock market is focused on tariffs and they believe that increased tariffs are going to hurt the economy," said Mike Rask, director of trading at Hodges Capital in Dallas. "There was the belief overnight that we were close to a trade deal with China and now it looks like that is not the case."
The Dow Jones Industrial Average fell 109.91 points, or 0.43 percent, to 25,270.83, the S&P 500 lost 17.31 points, or 0.63 percent, to 2,723.06 and the Nasdaq Composite dropped 77.06 points, or 1.04 percent, to 7,356.99.
Apple's shares tumbled 6.6 percent, taking its market value below $1 trillion, after the company said sales for the final quarter would likely miss expectations.
In Europe, Germany's export-heavy DAX had jumped as much as 1.5 percent, its best session since July, before giving up most of its gains.
The pan-European STOXX 600 index rose 0.28 percent and MSCI's gauge of stocks across the globe shed 0.06 percent.
U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9-1/2 years, pointing to further labor market tightening that could encourage the Federal Reserve to raise interest rates again in December.
Benchmark 10-year notes last fell 20/32 in price to yield 3.2198 percent, from 3.144 percent late on Thursday.
The dollar index, tracking the greenback against six major currencies, rose 0.19 percent, with the euro down 0.11 percent to $1.1394.
Oil prices were weighed down by a report that the U.S. government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after Washington re-imposes sanctions.
U.S. crude fell 1.13 percent to $62.97 per barrel and Brent was last at $72.68, down 0.29 percent on the day.
Reporting by David Randall; Editing by Dan Grebler and Chizu Nomiyama