* ECB announces fresh stimulus measures
* Euro STOXX 600 hits highest level since July 25
* MSCI's world equity index touches highest since July 31
* Trade headlines whipsaw markets (Updates with open of U.S. markets, changes dateline; previous LONDON)
By Chuck Mikolajczak
NEW YORK, Sept 12 (Reuters) - A gauge of global stock markets touched its highest since late July on Thursday after fresh hints of progress in the U.S.-China trade dispute, sending bond yields off lows hit earlier in the wake of the European Central Bank's new stimulus measures.
On Wall Street, major equity indexes climbed to session highs after a Bloomberg report said Trump administration officials have considered offering a limited trade deal to China that would delay or possibly roll back some tariffs, in exchange for assurances on intellectual property and agricultural purchases.
The report comes on the heels of recent signs of a thaw in negotiations between the world's two largest economies, including the announcement by China of some tariff exemptions on Wednesday.
"If that is the case, they could certainly be moving on trade and that would be a positive, absolutely would be a positive but I still think a lot of that is already priced into the market," said Ken Polcari, managing principal at Butcher Joseph Asset Management in New York.
Polcari noted the recent statements on trade between the two countries were "all little steps towards coming up with something, that is why the headline is not necessarily so surprising because you could almost feel like they wanted to say something."
Trading was volatile, as stocks quickly pared gains after a CNBC reported a White House official denied the U.S. was considering such a deal.
The Dow Jones Industrial Average rose 76.5 points, or 0.28%, to 27,213.54, the S&P 500 gained 10.59 points, or 0.35%, to 3,011.52 and the Nasdaq Composite added 42.06 points, or 0.51%, to 8,211.74.
Stocks in Europe were whipsawed by the trade reports as well after climbing on the earlier ECB policy statement, with the broad STOXX 600 index rising as much as 0.75%.
The European Central Bank promised an indefinite supply of fresh asset purchases and cut interest rates deeper into negative territory in an effort to buttress the euro zone economy.
The pan-European STOXX 600 index rose 0.18% and MSCI's gauge of stocks across the globe gained 0.41%.
Euro zone bond yields fell and the euro weakened following the ECB announcement but both eventually reversed course as the stimulus measures failed to live up to dovish market expectations as well as a reaction to the trade headlines.
After falling as low as a negative 0.124%, 30-year German yields were last at a negative 0.022% after moving into positive territory earlier this week.
The dollar index, tracking the unit against six major currencies, fell 0.18%, with the euro up 0.3% to $1.1042.
Trade optimism also pushed yields on U.S. Treasuries higher after earlier declines that were in sync with European bonds.
Benchmark 10-year notes last fell 6/32 in price to yield 1.7524%, from 1.733% late on Wednesday.
With the ECB decision in the rear view, attention now turns to the U.S. Federal Reserve, which is widely expected to cut rates next Wednesday.
Reporting by Chuck Mikolajczak; Editing by Bernadette Baum