* MSCI World flat after 5 1/2-month high
* Canada rejoins NAFTA talks in Washington
* Turkish lira slides again
* Global earnings growth still being revised up: reut.rs/2LAe0Mw
* Global assets performance in 2018: reut.rs/2LAbPsC
By Helen Reid
LONDON, Aug 29 (Reuters) - Global stocks faltered on Wednesday as optimism over a U.S.-Mexico trade deal faded with investors anxious about Canada’s acquiescence and eyeing a deadline for the next round of China-U.S. tariffs next week.
Canada’s chief negotiator continued talks to preserve a three-nation North American Free Trade Agreement following Monday’s deal, but uncertainty over how long it could take for a final agreement to pass Congress kept moves muted.
MSCI’s world equity index, which tracks shares in 47 countries, edged down 0.02 percent from the 5 1/2- month highs it hit after Mexico and the U.S. struck their deal.
“The market is quite right to say after the knee-jerk reaction higher in the Mexican peso and equities, a) there was remarkably little detail, and b) what is the state of Canada?” said Andrew Milligan, head of global strategy at Aberdeen Standard Investments.
“It helps this rebound in risk assets we’re seeing after the Turkey and global EM related selloff in the first half of the month, but it is an erratic rally because we need a bit more fuel to the fire.”
European stocks managed a 0.1 percent gain. So did EMini futures for the S&P 500.
U.S. President Donald Trump threatened to proceed with Mexico alone and levy tariffs on Canada if it does not come on board with the revised trade terms. But a trade deal might struggle to win approval from Congress unless Canada comes on board.
“The final decisions are unlikely until 2019 at the earliest,” said Goldman Sachs analysts, adding that control of the House majority might have gone to Democrats by then, which could make passage of the agreement more difficult.
Currencies reflected investors’ remaining uncertainty.
The Canadian dollar stalled at 1.292 to the U.S. dollar. Mexico’s peso recovered 0.3 percent to 19.02 to the dollar, having slid 1.7 percent on Tuesday as concerns over Brazil’s elections affected the region.
On another front of the global trade conflicts, analysts at JPMorgan noted the deadline for public comment on Trump’s increased tariffs on $200 billion of Chinese goods was less than a week away on Sept. 5.
“End-of-month flows could start to take hold into the end of the week, and combined with light news flow and the risk of impending trade war escalation could result in conviction remaining light,” they cautioned.
The White House has said it wants to settle NAFTA before dealing with China, suggesting that trade disputes will run well into 2019.
“There’s a big debate taking place among investors: is Trump hoping to reach agreement with all the big players to demonstrate what a successful negotiator he is, or is he trying to make sure he’s got agreement with NAFTA and the EU and therefore can turn all the firepower on to China?” said Aberdeen Standard’s Milligan.
Currencies quietened down after a turbulent few days, with the dollar index 0.1 percent firmer at 94.833 after touching a four-week low overnight.
The euro eased a fraction to $1.1670 after hitting a one-month high at $1.1733 overnight. The currency’s gains are being capped by concerns over Italy’s budget.
“We believe that Italy is headed on a collision course with the EU as the two meet to discuss Italy’s budget in September,” wrote Man Group portfolio managers in a note.
But peripheral bond markets outperformed on the day, with Italy’s 2-year bond yield falling to 1.249.
Emerging market stocks were under renewed pressure, falling 0.2 percent.
Turkey’s lira slid 1.7 percent to around 6.4 to the dollar, a two-week low as concern grew about the effects of the country’s currency crisis after Finance Minister Berat Albayrak was quoted as saying he did not see a risk to the economy or financial system.
Overall, though, emerging markets have had a strong recovery from the sharp selloff earlier this month.
“On balance people are looking to buy EM assets but it would be foolish to say buy them all because there are still vulnerabilities in a sizeable number,” said Aberdeen Standard’s Milligan.
In commodity markets, spot gold rose 0.2 percent to $1,203.01 an ounce.
Oil prices were little changed as falling supplies from Iran before U.S. sanctions take effect were offset by rising production outside the Organization of the Petroleum Exporting Countries.
Brent hovered at $75.98 a barrel. U.S. crude plateaued at $68.55.
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Reporting by Helen Reid, additional Reporting by Wayne Cole, editing by Larry King