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U.S. court blocks April 2 tariffs, White House appeals

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European stocks, Wall Street futures pare back earlier

rally

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Dollar loses steam against safe havens, gold slips

(Updates at 1247 GMT)

By Yoruk Bahceli and Wayne Cole

LONDON/SYDNEY, May 29 (Reuters) - An initial market

rally following a court ruling that blocked U.S. President

Donald Trump's so-called "Liberation Day" tariffs lost steam on

Thursday and the dollar fell against safe-haven currencies as

markets assessed the uncertainty ahead.

The Manhattan-based Court of International Trade ruled that

Trump overstepped his authority by imposing his April 2

across-the-board duties on imports from U.S. trading partners.

The White House appealed the decision, and could take it all

the way to the Supreme Court if needed. But in the meantime, it

offered some hope that Trump might back away from the highest

tariff levels he had threatened.

The ruling could also encourage U.S. trading partners to

pause any trade negotiations they are having with the White

House while they wait to see how the case is resolved.

Analysts at Goldman Sachs noted that the court order does

not block sectoral levies, and that there were other legal

avenues for Trump to impose across-the-board and

country-specific tariffs.

After rising initially on Thursday, stock markets pared

their gains as investors digested the news along with data

showing U.S. weekly jobless claims rising more than expected.

Europe's STOXX 600 index was up 0.1%, having risen

0.5% earlier.

U.S. markets looked primed for a stronger reaction, with S&P

500 futures up 0.8%, after gaining as much as 1.8%

earlier on Thursday. Nasdaq futures were last up 1.3%, having

benefited earlier from relief over earnings from Nvidia

, which beat sales estimates.

"I think the paring of earlier gains is mainly due to the

fact that the ruling doesn't change much fundamentally," said

Michael Brown, senior research strategist at Pepperstone.

"While the journey on tariffs might have changed, the

destination and endgame for most hasn't."

Britain's FTSE 100 index, meanwhile, largely

shrugged off the news and was last flat.

"Is this a sign that stock markets in countries who did

manage to score trade deals with the U.S. in recent weeks, could

be at a disadvantage if tariffs are reversed? This could be a

short-term theme to watch," said Kathleen Brooks, research

director at XTB.

Britain was the first country to secure a trade deal with

the U.S. and will hold talks with Washington next week to speed

up the implementation of that deal, the Financial Times

reported.

In Asia, Japan's Nikkei rose 1.9%, while South

Korean shares climbed 1.9% to a nine-month high. Chinese

blue chips firmed 0.6%.

DOLLAR RALLY FADES

The news of the court decision initially hit traditional

safe-haven currencies, which have benefited from tariff fears

punishing the U.S. dollar.

The dollar gained nearly 1% against the Japanese yen

earlier but was last down 0.2%. It was down 0.2%

against the Swiss franc after an earlier rally.

Another beneficiary of dollar woes, the euro

dropped as much as 0.7%, but was last up 0.4% against the U.S.

currency.

U.S. Treasury yields, which have been under pressure with

investors unnerved by Trump's hefty tax and spend bill,

initially rose on Thursday but retreated to trade flat.

Yields on 10-year Treasuries, which move

inversely with prices, were at 4.48% as markets remained

doubtful on the chance of a Federal Reserve rate cut anytime

soon.

Longer-dated, 30-year yields dipped from the

closely watched 5% level, last at 4.98%.

Minutes of the last Fed meeting showed "almost all

participants commented on the risk that inflation could prove to

be more persistent than expected" due to Trump's tariffs.

A rate cut in July is now seen at around a 20% chance, while

September is at around 70%, having been more than fully priced a

month ago.

In commodity markets, gold was down 0.7% to $3,313 an ounce

.

Oil prices rose initially then eased, with investors

watching for an OPEC+ decision on raising output in July, while

the U.S. barred Chevron ( CVX ) from exporting Venezuelan crude.

Brent was down 0.1% at $64.85.

(Additional reporting by Ankur Banerjee in Singapore, Stella

Qiu in Sydney and Summer Zhen in Hong Kong; Editing by Sam

Holmes, Lincoln Feast, Joe Bavier and Jane Merriman)