* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
* MSCI ACWI flat, set for best month since Jan
* Trump-Xi meeting at G20 in focus
* Dollar set for worst month since start of 2018
* Gold gains
By Ritvik Carvalho
LONDON, June 28 (Reuters) - World shares were steady on Friday as uncertainty ahead of a meeting on trade between U.S. President Donald Trump and Chinese President Xi Jinping deterred traders from making bold directional bets.
After stock markets slipped in Asia, European shares were marginally higher, with the pan-European STOXX 600 index up 0.08%. Germany's DAX index was the biggest gainer, up 0.36% percent on the day.
Trump and Xi will meet on the sidelines of a Group of 20 (G20) summit this weekend in Osaka, Japan, for talks that could help resolve a year-long trade war between China and the United States, as signs proliferate of rising risks to global growth.
MSCI's All Country World Index, which tracks shares in 47 countries, was up just 0.04% on the day.
The index was set to break a three-week streak of gains but also on course for its best month since January, gaining nearly 6% in June as equities rallied globally on the back of a pivot towards easier monetary policy from major central banks.
That shift came after a breakdown in trade negotiations between the United States and China earlier this year, and has markets betting on an interest rate cut from the U.S. Federal Reserve as early as the next policy meeting in July.
On Thursday, China's central bank pledged to support a slowing economy, ahead of the release of data that is expected to show China's factory activity shrank for a second consecutive month in June.
"Market participants are taking a cautious approach ahead of this high-level meeting as hopes for a material breakthrough are low," said Konstantinos Anthis, head of research at ADSS.
"This is a stellar opportunity for the two leaders to find some common ground and unless they do so, equities will likely push lower as a prolonged period of tariffs on each other's exports will take a heavier toll on both economies and global growth."
Currency markets also reflected caution, with the Japanese yen reversing a three-day losing streak against the dollar.
The U.S. currency was down 0.1% against a basket of peers and set to turn in its worst monthly performance since the start of 2018. Bets on interest rate cuts from the Fed have pushed the dollar index down 1.7% this month.
In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1%. Japan's Nikkei stock index ended down 0.29%.
Chinese blue chips fell 0.24% on Friday and Hong Kong's Hang Seng lost 0.32%. Australian shares shed 0.71%.
White House economic adviser Larry Kudlow said on Thursday that Trump had agreed to no preconditions for the meeting with Xi and is maintaining his threat to impose new tariffs on Chinese goods.
Kudlow also dismissed a Wall Street Journal report that China was insisting on lifting sanctions on Chinese telecom equipment giant Huawei Technologies Co Ltd as part of a trade deal and that the Trump administration had tentatively agreed to delay new tariffs on Chinese goods.
"I'm not sure the Americans can deliver what the Chinese want and the Chinese don't want to deliver what the Americans want," said Greg McKenna, strategist at McKenna Macro, adding that he sees an "extend and pretend" outcome, in which Chinese and U.S. officials agree to continue talks, as the most likely outcome of the weekend meeting.
Regardless of the outcome (of the talks), McKenna said, "we will not be in a holding pattern on Monday morning."
Elsewhere in Europe, euro zone government bond yields hovered near record lows in many cases ahead of the release of inflation data for the bloc.
With the euro zone expected to record inflation of 1.2% for the month of June when data is released at 1000 GMT on Friday -- well short of the European Central Bank's target of just below 2% -- investors held on to government bonds in early trade.
In commodity markets, trade worries continued to weigh on oil, with U.S. crude losing 0.3% to $59.26 a barrel and global benchmark Brent crude down 0.36% to $66.31 per barrel.
The weak dollar and uncertainty over global trade saw gold rebound after dipping below $1,400 per ounce on Thursday. Spot gold was last traded at $1,414.15 per ounce, up 0.35%, but down from earlier highs. (Reporting by Ritvik Carvalho; additional reporting by Andrew Galbraith in SHANGHAI; Editing by Catherine Evans)