* MSCI Asia ex-Japan up 0.28% as HK plays catch-up
* Trump says trade deal should favour U.S.
* Global PMIs show manufacturing weakness
* RBA cuts cash rate to record low 1%
* Asian stock markets: tmsnrt.rs/2zpUAr4
By Andrew Galbraith
SHANGHAI, July 2 (Reuters) - Asian shares wobbled on Tuesday, U.S. Treasury yields fell and gold rebounded as weak global factory activity reinforced fears about slowing growth, while doubts over whether the United States and China can pull off a trade deal also hurt sentiment.
Markets in Europe are expected to extend the previous day's rally, with financial spreadbetters seeing London's FTSE and Paris' CAC up 0.3% each at the open, and Frankfurt's DAX 0.2% higher.
President Donald Trump said on Monday that any trade deal with China would need to be "somewhat tilted" in favour of the United States. The U.S. government also threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.
U.S. S&P 500 e-mini futures were up 0.09% and MSCI's broadest index of Asia-Pacific shares outside Japan added 0.28%, helped by a 1.23% gain in Hong Kong shares as investors caught up to Monday's global rally. Markets in Hong Kong had been closed on Monday for a public holiday.
But Chinese blue-chips dipped 0.13% and Korean shares lost 0.3%.
"Euphoria that the trade negotiations are back on the table has probably waned and again the cautious tone is getting hold of the markets," said Prakash Sakpal, an economist with ING in Singapore.
"We need to see a great deal of negotiation progress on the China-U.S. trade war. And we should also see more regional policy stimulus actually kicking in to prevent any further deterioration in economic activity across the region."
Australian shares were flat, pulling back from earlier gains after the Reserve Bank of Australia cut its benchmark cash rate by 25 basis points to a record low of 1.0%, as widely expected. However, the RBA left limited room for more reductions, raising the possibility of unconventional policy easing.
Japan's Nikkei finished up 0.11%.
Global shares had rallied strongly on Monday after the United States and China agreed on the weekend to restart trade negotiations aimed at resolving their year-long trade war and Washington said it would postpone further tariffs.
U.S. President Donald Trump also offered concessions, including an easing of restrictions on tech company Huawei .
Yet, with the previous rounds of Sino-U.S. negotiations breaking down in acrimony, investors were now turning to the prospects of actual progress in talks to settle the dispute that has dented global trade, business investment and economic growth.
The fresh U.S. tariff threats against Europe also point to a worrisome prospect of a broadening trade dispute, said Michael McCarthy, chief markets strategist at CMC Markets in Sydney, in a note to clients.
"The problem is the widening of the dispute. Europe, the U.S. and China account for almost two thirds of global GDP," he said. "An ongoing disruption to trade between these three major economies, prosecuted for domestic political purposes, could sink global growth."
Manufacturing surveys over the past 24 hours underscored those risks. Factory activity in the euro zone shrank faster last month than previously thought, and U.S. manufacturing activity slowed to a near three-year low in June.
"Global manufacturing PMI took the wind from the sails of risk assets outside of those which are stock related as it becomes apparent this is a real and genuine slowdown the world is experiencing," Greg McKenna, strategist at McKenna Macro, said in a note to clients.
While stocks on Wall Street ended higher, they pared early gains that had seen the benchmark S&P 500 index briefly surpass its previous record high.
The Dow Jones Industrial Average rose 0.44% to 26,717.43, the S&P 500 gained 0.77% to 2,964.33 and the Nasdaq Composite added 1.06% to 8,091.16.
Over recent trading sessions, risk assets have also been held back by a tempering of expectations by U.S. Federal Reserve policymakers for aggressive rate cuts at this month's meeting.
"With the easing of Sino-U.S. trade frictions there will certainly be an improvement in downward pressure on the U.S. economy, and the need for the Fed to ease will clearly lessen," analysts at Jianghai Securities said in a note.
Market expectations that the Fed would implement a relatively large rate cut in July have fallen, with the probability of a 50 basis-point cut at 17.5%, from close to 50% last week.
The cautious market mood pushed the yield on benchmark 10-year Treasury notes lower to 2.017%, compared with its U.S. close of 2.033% on Monday, while the two-year yield, watched as a gauge of rate expectations, edged down to 1.7713% from a U.S. close of 1.787%.
The safe-haven yen strengthened against the dollar, which fell 0.09% to 108.34, and the euro was flat at $1.1287. The dollar index, which tracks the greenback against major rivals was 0.05% lower at at 96.792.
In commodity markets, Brent crude recovered after worries over the outlook for the global economy had weighed on prices. The global benchmark was up 0.11% at $65.13 per barrel, though U.S. crude remained weaker, down 0.05% at $59.06 a barrel
Spot gold retained its lustre, adding 0.52% to $1,391.26 per ounce.
Reporting by Andrew Galbraith; Additional reporting by David Randall in NEW YORK Editing by Jacqueline Wong & Shri Navaratnam