GLOBAL MARKETS-Stocks gain as investors welcome preliminary U.S.-China trade deal

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* STOXX 600 index hits record high
* Euro business growth remains weak - PMI
* FTSE 100, sterling move higher in tandem

By Ritvik Carvalho
LONDON, Dec 16 (Reuters) - World stock markets rose on
Monday, trading a notch below a record high hit last week on the
back of a preliminary trade deal agreed between the United
States and China.
European shares built on the previous week's gains. By
midday in London, the pan-European STOXX 600 .STOXX index was
up by 1.2% and touched a record high. Germany's DAX .GDAXI
rose 0.6%.
Britain's FTSE 100 .FTSE index was up 1.14%, moving in
tandem with a buoyant pound that rose 0.3%, adding to gains last
week on the back of a landslide victory for Prime Minister Boris
Johnson's Conservative Party in the UK election. .EU GBP/
U.S. stock futures also pointed to stronger gains to start
the week, with the S&P 500 e-minis ESc1 up 0.36%.
U.S. Trade Representative Robert Lighthizer said on Sunday a
deal was "totally done", notwithstanding some needed revisions,
and would nearly double U.S. exports to China over the next two
years. The "phase one" agreement suspended a threatened round of
U.S. tariffs on a $160 billion list of Chinese imports that was
scheduled to take effect on Sunday. The United States also
agreed to halve the tariff rate, to 7.5%, on $120 billion worth
of Chinese goods.
"It's good news but we can't celebrate yet," said Mark
Mobius, founding partner of Mobius Capital Partners.
"There's going to be a lot more going forward. This
agreement is dependent on the degree to which the Chinese
comply. This conversation will continue as there's so many
issues. It's not just about trade. Its about technical issues,
know-how, technology...So there'll be a continuing situation."
The 17-month-old trade dispute between the world's two
largest economies has buffeted financial markets and taken a
toll on global economic growth.
Euro zone business growth remained weak in December, with
tepid foreign demand exacerbating a contraction in manufacturing
and offsetting a slight pick-up in services activity, although
some analysts saw signs of stabilisation. Positive sentiment helped push MSCI's All Country World
Index .MIWD00000PUS up 0.25%. The index, which tracks stocks
across 47 countries, reached an all-time high on Friday when the
trade deal was agreed.
Earlier in Asia, MSCI's broadest index of Asia-Pacific
shares outside Japan .MIAPJ0000PUS to its highest level since
April 18. It was last up 0.14%.
Australia's S&P/ASX 200 .AXJO led the way as it jumped
1.63%, while shares in Taiwan .TWII added 0.1%.
Japan's Nikkei 225 .N225 succumbed to some profit-taking,
falling 0.29% after surging 2.55% to a 14-month closing high on
Friday.
Ryan Felsman, senior economist at CommSec in Sydney, said
the trade deal and the receding risk of a disorderly Brexit
after the British election yielded a strong Conservative
majority provided support for sentiment in Australia.
A lower-than-expected Australian budget surplus due to a
sluggish economy has also "built expectations by markets for
further easing from the Reserve Bank (of Australia)", he said.
Chinese investors initially had a more tepid reaction to the
trade news, with the blue-chip CSI300 index .CSI300 struggling
to rise further after trade hopes fanned a near 2% rise on
Friday.
But after a lacklustre morning session, the CSI300 index
turned higher and was last up 0.5%, helped by data showing the
country's industrial output growth and retail sales jumped more
than expected in November. Felsman at CommSec said investors wanted more details and
the reduction in U.S. tariffs may have disappointed some looking
for more aggressive action.
"Certainly there were expectations perhaps that the rollback
would be more significant than just 50%," he said.
U.S. shares had struck a cautious note on Friday, paring
initial gains to end barely higher as weary investors awaited
signs of a concrete deal.
However, the news of a deal was still enough to send the S&P
500 .SPX to a record closing high of 3,168.8, up 0.01%.
The Nasdaq Composite .IXIC added 0.2% to end at 8,734.88,
also a record, and the Dow Jones Industrial Average .DJI rose
0.01% to 28,135.38.
U.S. Treasury yields moved higher on Monday, reflecting a
more positive mood. Benchmark 10-year Treasury notes US10YT=RR
rose to 1.8452% compared with their U.S. close of 1.821% on
Friday, and the two-year yield US2YT=RR touched 1.6304%
compared with a U.S. close of 1.604%.
The dollar was slightly higher against the yen at 109.45
JPY= and the euro was up 0.22% at $1.1144. EUR=
The dollar index .DXY , which tracks the greenback against
a basket of six major rivals, was down 0.19% at 96.984.
Oil prices, which had risen on Friday following the
China-U.S. deal, hovered near three-month highs. Brent crude was
higher by 0.3% at $65.35 per barrel, and U.S. West Texas
Intermediate crude CLc1 was flat at $60.05 per barrel.
Spot gold prices XAU= were flat at $1,476.10 per ounce.
GOL/