* Turkish lira touches near four-month low versus USD
* Oil pares gains but still higher in post-settle trade (Updates prices, changes comments)
By Rodrigo Campos
NEW YORK, Oct 9 (Reuters) - Stocks gained on Wednesday on a report that China could yet agree to a partial trade deal with the United States despite recent tensions, while the prospect of a last-minute Brexit agreement between the European Union and Britain seemed as remote as ever.
Sterling was little changed against the dollar after losing nearly 1% over the past two sessions.
China is still open to agreeing to a partial trade deal, Bloomberg reported on Wednesday, despite the recent U.S. blacklisting of Chinese technology firms and reports on visa restrictions from both sides.
"You don't want to ignore headlines, but at the same time each headline seems to say the same thing - that both sides want to see something happen and both sides are encouraged that something may happen," said Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston.
Markets have been wobbly this month on more evidence that the U.S.-China conflict over trade is increasingly damaging the global economy. Stocks have been particularly sensitive to headlines regarding trade.
"Investors are hoping for an interim deal, they aren't expecting anything big, but are cautiously optimistic," said Michael Geraghty, equity strategist at Cornerstone Capital Group.
On Wall Street, the Dow Jones Industrial Average rose 208.58 points, or 0.8%, to 26,372.62, the S&P 500 gained 29.3 points, or 1.01%, to 2,922.36 and the Nasdaq Composite added 89.72 points, or 1.15%, to 7,913.49.
The pan-European STOXX 600 index rose 0.42% and MSCI's gauge of stocks across the globe gained 0.60%.
Emerging market stocks lost 0.03%, while Nikkei futures rose 1.2%.
Talks between the European Union and Britain over an agreement regarding London's departure from the EU on Oct. 31 appeared to be going nowhere.
British lawmakers have voted to force Prime Minister Boris Johnson to seek an extension to the departure date if he cannot agree a deal, but the prospect of further prolonged political uncertainty is worrying investors.
Sterling was recently at $1.2213, down 0.03% on the day after falling 0.93% over the two previous sessions.
The dollar index fell 0.02%, with the euro up 0.16% to $1.0972.
The Japanese yen weakened 0.39% versus the greenback at 107.52 per dollar.
The Turkish lira touched a near four-month low versus the dollar after Ankara launched a military operation against Kurdish fighters in northeast Syria just days after U.S. troops pulled back from the area.
The Turkish currency lost 0.47% versus the dollar at 5.86.
In bond markets, U.S. Treasury yields rose as investors happy to take on some more risk sold out of safer assets. A flood of supply also weighed on U.S. bond prices.
Benchmark 10-year notes last fell 11/32 in price to yield 1.5768%, from 1.539% late on Tuesday.
Ecuadorian bonds tumbled as protesters began a national strike after President Lenin Moreno refused to step down or overturn anti-austerity measures that have triggered the worst unrest in a decade.
Oil prices edged higher as Turkey's attack on Syria and hopes of trade talks progress were partly offset by a build in U.S. crude inventories.
U.S. crude rose 0.23% to $52.75 per barrel and Brent was last at $58.44, up 0.34% on the day.
Spot gold added 0.2% to $1,507.60 an ounce. U.S. gold futures gained 0.61% to $1,513.40 an ounce.
Reporting by Rodrigo Campos; additional reporting by Tommy Wilkes and Bozorgmehr Sharafedin in London and Laila Kearney and Kate Duguid in New York; Editing by Bernadette Baum and Nick Zieminski