* Mixed earnings weigh on European bourses
* Nikkei hits one-year high after S&P 500 reaches record
* Trump talks up progress on China trade
* EU grants Britain three-month Brexit extension
* Market sees Fed cutting rates, cautious on outlook
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
By Karin Strohecker
LONDON, Oct 29 (Reuters) - World stocks hovered near a 15-month high on Tuesday underpinned by cautious hopes over a China-U.S trade deal and expectations of another dose of policy stimulus from the Federal Reserve, with safe havens such as gold and yen on the back foot.
A mixed bag of earnings offset the chipper mood on European bourses, with the pan-regional STOXX 600 snapping a six-day winning streak to ease 0.4% and Germany's DAX index slipped 0.1%.
Britain's FTSE 100 fell 0.5% as uncertainty over a looming general election compounded a 2.6% drop in shares of BP after the oil major posted a sharp drop in third quarter profit.
The losses in Europe followed a mixed performance in Asia, where Japan's Nikkei rose 0.4% to reach levels last seen a year ago. Shanghai blue chips dithered either side of flat.
U.S. President Donald Trump said on Monday he expected to sign a significant part of a trade deal with China ahead of schedule but did not elaborate on the timing.
The U.S. trade representative also said Washington was studying whether to extend tariff suspensions on $34 billion of Chinese goods set to expire on Dec. 28.
But analysts cautioned that trade tensions were far from over.
"It isn't yet clear that an interim deal that kicks trade worries down the road would be sufficient to allay concerns about the geopolitical, economic, earnings, and policy backdrop," Mark Haefele, CIO at UBS Global Wealth Management.
"President Trump's announcement of a Chinese commitment to buying $40–50 billion of U.S. agricultural products appears unrealistic – U.S. exports to China peaked at just $26 billion in 2012, when prices were much higher."
U.S. futures pointed to a flat open on Wall Street after Monday's rally in which the S&P 500 gained 0.56% to a record closing peak, the Dow rose 0.49% and the Nasdaq 1.01%.
Microsoft Corp climbed 2.46% in late NY trade after winning the Pentagon's $10 billion cloud computing contract, beating out Amazon.com Inc. Google parent Alphabet Inc, meanwhile, slipped after missing analysts' estimates for quarterly profit even though revenue growth topped expectations.
With markets in wait and see mode for Fed and trade developments, bond yields inched lower. Germany's benchmark 10-year bond yield hovered just below three-month highs hit on Monday, when yields across the single currency bloc rose sharply after the European Union granted Britain a Brexit extension.
Yields on two-year U.S. Treasury notes were flat after hit four-week highs on Monday at 1.668%.
Investors are still looking forward to a likely rate cut from the Federal Reserve on Wednesday, though the outlook was less clear beyond that.
"We expect the Federal Reserve will cut rates this week and possibly once next year, as insurance against a broad economic slowdown," BlackRock's chief fixed income strategist, Scott Thiel, said in a note to clients.
The futures market has 50 basis points of cuts priced in by June.
Central banks in Japan and Canada also meet this week, with talk the former might ease further if only to prevent an export-sapping bounce in its currency.
The shift from safe harbours saw the yen losing steam with the dollar standing at 108.95 yen after having reached its highest in three months. It was eyeing a key technical level at 109.31.
The euro edged up to $1.1095 and the dollar index was little changed against a basket of currencies at 97.784.
The British pound, meanwhile, wobbled briefly as Britain looked set for a snap December election, with the recent surge on hopes of a smooth Brexit looking capped by the outside risks that the various election outcomes could bring to that scenario.
Sterling has gained more than 5 percent over the last three weeks against the greenback and stocks rallied as fears of Britain crashing out of the European Union faded after European policymakers agreed on a third extension until end-January.
Spot gold slipped 0.5% to $1,485 per ounce, after having pulled away from last week's top around $1,517.
Oil prices were pressured by signs of rising U.S. crude stock piles. Brent crude futures slipped 70 cents to $60.90 a barrel, while U.S. crude lost 1 dollar to $54.77.
Reporting by Karin Strohecker, additional reporting by Wayne Cole in Sydney; Editing by Nick Tattersall and Ed Osmond