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Global stocks, Wall Street shares gain

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European stocks soft after strong rally

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Fed cautious on rate cuts due to tariff uncertainty

(Updated at 10:43 a.m. ET (1443 GMT)

By Chris Prentice and Samuel Indyk

NEW YORK/LONDON, May 14 (Reuters) -

Global shares and Wall Street were higher on an easing in

trade tensions between the world's two largest economies, while

the U.S. dollar extended losses as benign U.S. inflation data

kept Federal Reserve rate cuts on the table.

Gold prices fell as the U.S.-China trade truce dimmed

bullion's safe-haven appeal.

European stocks eased after four sessions of gains. Asian

shares gained.

MSCI's gauge of stocks across the globe

rose 2.24 points, or 0.26%, to 873.44.

As a truce in the tariff spat between China and the United

States appeared to hit pause in the global trade war, investors

have pushed global equities higher, although European shares

took a breather on Wednesday.

"It's all about the change in risk appetite," said Lars

Skovgaard, senior investment strategist at Danske Bank.

"I have a hard time seeing that we'll go back to this

extreme political noise," he added.

On Wall Street, the Dow Jones Industrial Average

rose 64.35 points, or 0.15%, to 42,204.78, the S&P 500

rose 2.26 points, or 0.04%, to 5,888.81 and the Nasdaq Composite

rose 72.27 points, or 0.38%, to 19,082.35.

Europe's STOXX 600 retreated after having jumped

over 17% since its trough on April 9, the day U.S. President

Donald Trump announced he would be pausing most of the

reciprocal tariffs on U.S. trading partners.

MSCI's broadest index of Asia-Pacific shares outside

Japan closed higher by 1.56%, to 614.33, while

Japan's Nikkei fell 55.13 points, or 0.14%, to

38,128.13.

The broader Topix snapped a 13-day winning run,

its longest streak in nearly 16 years.

Hong Kong's Hang Seng index jumped, lifted by tech

stocks after Chinese e-commerce retailer JD.com ( JD ) posted

strong results. Tencent ( TCTZF ), China's biggest tech company,

posted a 13% rise in first-quarter revenue on Wednesday.

Focus this week will also be on earnings from Alibaba ( BABA )

on Thursday.

Data on Tuesday showing softer-than-expected U.S. consumer

inflation also provided some relief to investors worried about

the inflationary impact of U.S. tariff policies, which had

severely undercut expectations of near-term Fed rate cuts.

Though traders expect inflation to pick up as tariffs lift

import costs, the uncertainty over the outlook remains as

Washington moves ahead to strike deals with its trading

partners.

"U.S. tariffs on Chinese goods are still much higher than

they were months ago," said Wei He, China economist at Gavekal

Research.

"There's still plenty of uncertainty about the outlook."

Trump in an interview on Tuesday said he could see himself

dealing directly with Chinese President Xi Jinping on details of

a trade pact. His touted "potential deals" with India, Japan and

South Korea are still pending.

ASSESSING TARIFF IMPACT

The Fed has warned of rising economic uncertainty,

signalling it is prepared to wait to assess the impact of U.S.

tariffs before moving to cut interest rates again. Fed Chair

Jerome Powell is scheduled to give remarks on Thursday.

The U.S. dollar, which has taken a beating recently on the

back of the economic and policy uncertainty, fell 0.24% against

a basket of currencies including the yen and the euro.

Global asset managers held their biggest underweight

position in the dollar in 19 years in May, as Trump's trade

policy cut investor appetite for U.S. assets, Bank of America's

global fund manager survey (FMS) showed on Tuesday.

The euro gained 0.25% to $1.1212.

U.S. yields rose as investors weighed softer-than-expected

April inflation data against expectations that tariffs will fuel

higher prices in the coming months.

Euro zone yields

meanwhile retreated.

The next major signal for U.S. economic health is retail

sales data for April due on Thursday. The same day, talks are

planned between Ukraine and Russia in Istanbul with hopes of a

ceasefire three years into the deadliest conflict in Europe

since World War Two.

In commodities, rising U.S. crude stockpiles pressured

prices. Brent crude futures fell to $66.07 per barrel,

down 0.84% on the day. U.S. crude fell 0.91% to $63.09 a

barrel

Spot gold fell 1.96% to $3,183.69 an ounce.