(Adds U.S. market open, byline, dateline; previous LONDON)
* Wall Street indexes set record highs
* MSCI's all-country index edges closer to record high
* U.S.-China trade talks continue to hog spotlight
* Dollar trades little changed
By Herbert Lash
NEW YORK, Nov 26 (Reuters) - The dollar and a gauge of global stock markets traded little changed on Tuesday as record highs on Wall Street were offset by caution as traders scrutinized the latest developments in the prolonged U.S.-China trade talks.
Oil prices traded near flat after China's Commerce Ministry said Chinese and U.S. trade negotiators held a phone call as the two sides try to hammer out a "Phase one" deal in a trade war that has dragged on for 16 months.
U.S. and euro zone bond yields slid as investors saw progress being made after the ministry said Chinese Vice Premier Liu He spoke with U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.
MSCI's gauge of stocks across the globe gained 0.07%, as the global benchmark traded within half a percentage point of an all-time high set in January 2018.
Equity markets have rallied on hopes of a deal but traders are looking for what the reaction might be once a deal is reached, said Dennis Dick, a proprietary trader at Bright Trading LLC in Las Vegas.
"Traders are starting to book some profits and just get cautious. Cautious optimism is driving us higher right now," he said.
The pan-European STOXX 600 index rose 0.17% while MSCI's emerging markets index fell 0.63%.
All three major indexes on Wall Street set record highs.
The Dow Jones Industrial Average rose 28.37 points, or 0.1%, to 28,094.84. The S&P 500 gained 4.34 points, or 0.14%, to 3,137.98 and the Nasdaq Composite added 17.04 points, or 0.2%, to 8,649.52.
Oil prices traded little changed, helped by predictions for a draw on U.S. crude stockpiles as doubts lingered about the economic impact of a trade deal.
"The positive effect this is having on the oil price is more psychological in nature," said Commerzbank analyst Carsten Fritsch. He noted that he does not expect oil demand to pick up noticeably even after any partial agreement is signed.
U.S. crude stockpiles were expected to have declined 300,000 barrels last week, according to a Reuters poll of analysts, ahead of reports from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday.
Brent crude futures slid 9 cents to $63.74 a barrel, while West Texas Intermediate crude rose 10 cents to $58.11 a barrel.
The dollar also traded little changed.
Data showed the U.S. goods trade deficit fell sharply in October as both exports and imports declined, pointing to a continued reduction in trade flows that has been blamed on the Trump administration's "America First" policy.
U.S. consumer confidence fell for a fourth straight month in November while other data showed an unexpected drop in new home sales last month.
The dollar index was flat, with the euro up 0.02% to $1.1015. The Japanese yen weakened 0.12% versus the greenback at 109.06 per dollar.
Benchmark 10-year U.S. Treasury notes last rose 10/32 in price to push their yield down to 1.7311%.
Reporting by Herbert Lash; Editing by Dan Grebler