USA is leading world stocks higher on hopes of a trade agreement between the US and China

NEW YORK (Reuters) – With broad gains in the US stock market, global stocks rallied on Tuesday after President Donald Trump said China was a "big deal" that would ease fears of a growing trade war between the two largest economies ,

Traders work on the New York Stock Exchange (NYSE) floor in New York, USA, October 30, 2018. REUTERS / Brendan McDermid

The euro hovered near a 10-week low of 1.1352 as the dollar climbed to a 2 1/2 month high against a basket of the world's top six currencies. JPY = EBS .DXY

MSCI equities worldwide .MIWD00000PUS gained 0.31 percent. Nevertheless, the index has fallen by almost 10 percent for the month.

Investors remained cautious despite low global gains.

"Nobody can say that the stock market bottomed out at this point, and global investor sentiment remains questionable," said Yasuo Sakuma, chief investment officer for Libra Investments in Tokyo.

Market participants also had hopes for trade.

"We do not see that the trade war will be solved in the foreseeable future," said Rabbotank chief economist Teeuwe Mevissen. "And there comes a time when we see all the sentiment indicators in the eurozone, but also in the US, which cool down."

Trump said during an interview with Fox News that he could expect an agreement with China on trade, but said he had new billions of dollars worth of tariffs that would be imposed if a deal was not possible.

The Dow Jones Industrial Average (DJI) rose 192.43 points or 0.79 percent to 24,635.35, while the S & P 500.SPX rose 13.94 points or 0.53 percent to 2,655.19 and the Nasdaq Composite .IXIC added 37.58 points or 0.53 percent to 7,087.87.

Profits were broad in the US and all 11 sectors of the S & P Reference Index rose. Trading-sensitive industrials gained nearly 1.2 percent in the morning.

Data showed that the Italian economy was stopped in the third quarter as both domestic demand and trade did not drive growth.

The flat performance was the weakest since the fourth quarter of 2014 and again weighed on Italy's debt sovereign debt.

The pan-European STOXX 600 Index lost 0.14 percent.

The slowdown in China and world trade left emerging market equities at an 18-month low, and the MSCI index .MSCIEF fell for the sixth consecutive year.

Oil prices tumbled more than 1 percent in troubled trading as signs of rising supply and concern about global economic growth and demand for fuel would come from a deepening trade dispute between the US and China.

Crude oil CLcv1 fell 1.06 percent to $ 66.33 a barrel and Brent LCOcv1 was recently $ 76.30, down 1.34 percent.

Benchmark 10-year notes US10YT = RR last fell 4/32 in price by 3.1 percent, from 3.087 percent on late Monday.

Reporting by David Randall; Editing by Bernadette Baum

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