August 29, 2019 / 3:42 PM / 22 days ago

GLOBAL MARKETS-Shares rally as China fuels trade deal hopes, Italy moves toward new government

* Italian 10-year bond yields hit record low

* Yields on US, German bonds rise as stocks advance

* Argentina peso tumbles on plan to reprofile debt

* Gold near six-year high, silver shines (Updates to open of U.S. markets, changes byline, dateline; previous LONDON)

By April Joyner

NEW YORK, Aug 29 (Reuters) - U.S. and European shares advanced on Thursday as China struck a hopeful tone on trade relations with the United States and as Italy appeared close to forming a new government and resolving its political crisis.

Wall Street stocks jumped 1% after China’s commerce ministry said Beijing and Washington were discussing the next round of face-to-face talks scheduled for September. The comments spurred hopes for progress in the talks and boosted the Chinese yuan, which snapped a 10-day losing streak.

“We are seeing a bit of a softer tone that’s giving investors hope,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Perhaps the September talks might bring some fruitful conclusions and some progress that could result in lowering tariffs or getting serious about concluding a trade deal,” he added.

European shares also rose after Italy’s president asked former prime minister Giuseppe Conte to return to head up a new coalition of the anti-establishment 5-Star Movement and the opposition centre-left Democratic Party.

The coalition is a step toward resolving a three-week political crisis triggered after League leader Matteo Salvini pulled his hard-right party out of its governing alliance with 5-Star. Italian stocks rose 1.77%, and the country’s government bonds also rallied, with yields on 10-year bonds hitting a record low.

U.S. Treasury yields, however, moved off recent lows as stocks rose. Data showing second-quarter U.S. gross domestic product growth in line with consensus estimates also bolstered bond yields.

Yields on German 10-year bonds also ticked higher.

Among currencies, Argentina’s peso rebounded to trade little changed against the U.S. dollar after sinking as much as 3% earlier in the day on the country’s plans to extend the maturities on some $100 billion of its debt.

On Wall Street, the Dow Jones Industrial Average rose 287.02 points, or 1.1%, to 26,323.12, the S&P 500 gained 31.62 points, or 1.09%, to 2,919.56 and the Nasdaq Composite added 109.56 points, or 1.39%, to 7,966.44.

The pan-European STOXX 600 index rose 0.95% and MSCI’s gauge of stocks across the globe gained 0.82%.

Benchmark 10-year Treasury notes last fell 14/32 in price to yield 1.513%, from 1.468% late on Wednesday.

The dollar index, tracking it against six major currencies, rose 0.2%, while the euro was down 0.14% to $1.1061.

The Japanese yen weakened 0.33% versus the greenback at 106.48 per dollar. Sterling was last trading at $1.2188, down 0.17% on the day.

In offshore trading, the Chinese yuan was last 0.33% higher at 7.145 per dollar.

Gold edged lower, though it still hovered near a six-year peak. Spot gold last fell 0.05% to trade at $1,538.06 per ounce.

Silver rose 0.98% to $18.51 an ounce after hitting its highest level since April 2017 at $18.64 earlier in the session.

In oil markets, U.S. crude extended its gains from Wednesday on data showing a sharp fall in U.S. inventories, while Brent held above $60 a barrel.

U.S. crude rose 1.09% to $56.39 per barrel and Brent was last at $60.64, up 0.25% on the day.

Reporting by April Joyner; Additional reporting by Akanksha Rana in Bengaluru and Marc Jones in London; Editing by Bernadette Baum

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