November 15, 2019 / 4:25 PM / 9 months ago

GLOBAL MARKETS-U.S.-China trade hopes revive stocks, yields rise

(Adds U.S. markets open, byline, dateline; previous LONDON)

* Kudlow says U.S., China getting close to trade deal

* Stocks on Wall Street hit record highs, MSCI climbs

* Treasury, European government yields gain on trade hopes

* Risk assets gold, Japanese yen decline

By Herbert Lash

NEW YORK, Nov 15 (Reuters) - Global equities markets rose and safe-haven assets such as gold and government debt fell on Friday on renewed hopes that the United States and China will reach a deal to de-escalate their trade war helped boost risk appetite.

The three major U.S. stock indexes opened higher and set fresh record highs while equity markets from Tokyo to the major bourses in Europe and across the Americas gained on remarks by White House economic adviser Larry Kudlow on Thursday.

Kudlow cited what he called very constructive talks with Beijing about ending a 16-month trade war during an event at the Council on Foreign Relations in Washington.

"We're getting close," Kudlow said.

Progress was being made on an agreement's details, according to U.S. Commerce Secretary Wilbur Ross, who said the trade talks are set to continue with a telephone call on Friday as both sides seek to hammer out a "phase one" pact.

MSCI's gauge of stocks across the globe gained 0.51%, with its emerging markets index rising 0.66%. In Europe, the pan-regional STOXX 600 index rose 0.26% and the FTSEurofirst 300 index of leading shares adding 0.19%.

On Wall Street, the three major indices hit record highs.

The Dow Jones Industrial Average rose 106.48 points, or 0.38%, to 27,888.44. The S&P 500 gained 11.64 points, or 0.38%, to 3,108.27 and the Nasdaq Composite added 40.89 points, or 0.48%, to 8,519.91.

"The market rally has largely been driven by the positive sentiment around the trade talks, obviously," said Rahul Shah, chief executive of Ideal Asset Management in New York.

The fourth quarter, which tends to be the best period for corporate earnings, will likely be supportive of stocks going forward, but poor macroeconomic data or a political event could trigger a downturn, Shah said.

"Since the market is hitting all-time highs and everybody's comfortable, the risk of an event affecting the market negatively is higher now because the market is an elevated level," he said.

The S&P 500 has gained almost 25% year to date, and forward earnings for the benchmark index are at 18 times.

Nine of the 11 major S&P 500 sectors were higher, with the trade-sensitive technology sector rising the most with a 0.59% gain.

Gold prices and government debt prices fell as investors leaned away from safe-haven assets on fresh hopes the United States and China will de-escalate trade tensions.

Spot gold dropped 0.2% to $1,468.38 an ounce while benchmark 10-year U.S. Treasury notes fell 2/32 in price to push yields up to 1.8221%.

Germany's 10-year Bund yield traded at -0.344%.

Oil prices rose on signs of progress in the U.S.-China trade talks, offsetting concerns about rising supplies next year.

Benchmark Brent crude gained 37 cents to $62.65 a barrel while West Texas Intermediate crude rose 45 cents to $57.22 a barrel.

The Japanese yen and Swiss franc, both beneficiaries of a flight to quality, weakened.

The dollar index fell 0.18%, with the euro up 0.26% to $1.105. The Japanese yen weakened 0.28% versus the greenback at 108.74 per dollar.

Reporting by Herbert Lash

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