*

Nippon Steel ( NISTF ) up after Trump offers support for U.S. Steel

deal

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China-listed Apple ( AAPL ) suppliers fall after Trump's tariff

threats

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US, UK markets closed for public holidays on Monday

(Updates prices throughout, adds quote in paragraph 6)

By Nell Mackenzie and Johann M Cherian

LONDON/SINGAPORE, May 26 (Reuters) - Global markets

climbed on Monday and the euro rallied after U.S. President

Donald Trump kicked his threat to slap 50% tariffs on European

Union goods into July, marking another temporary trade policy

reprieve.

MSCI's broadest index of world shares rose

0.2%. The pan-European stocks index, last up 1%,

recovered to where it was trading before Trump on Friday

unexpectedly called for 50% tariffs on European goods, saying

negotiations with the region had become too sluggish.

On Sunday, Trump reversed tack, pushing the deadline for

tariffs to July 9 from June 1, after European Commission

President Ursula von der Leyen said the 27-nation bloc needed

more time to produce a deal.

Trump's latest policy moves were a reminder to investors how

quickly circumstances could change, and analysts have pointed

out that investors are shifting their money out of U.S. markets

to Europe and Asia as they price in a possible U.S. recession

and a consequent global slowdown.

Last Friday's comments were a reminder of Trump and his

administration's unpredictable and seemingly incoherent policies

and decision-making, Commerzbank said in a note.

"Now, a really toxic cocktail is mixed for the U.S.

consisting of (1) rising risk premium to hold U.S. assets, (2)

global investors' move towards increased portfolio

diversification, and (3) an increased homeland focus," said a

note from SEB Research adding that they expected the dollar to

lose value while U.S. interest rates could rise further.

EURO GAINS

The dollar fell 0.1% against a basket of currencies

on Monday. The euro appreciated 0.24% to $1.1382 - its

highest since late April, while the pound ticked almost

0.2% upwards to 1.3560.

"It still is largely a 'sell dollar story'," said

Christopher Wong, currency strategist at OCBC.

"The policy unpredictability surrounding Trump's tariffs and

of course, the erosion of the U.S. exceptionalism, this could

potentially still undermine sentiment and the confidence in the

medium term."

Trading volumes on Monday are expected to be thinner than

usual, given that markets in the United States and Britain are

closed due to public holidays.

Ballooning debt levels in developed economies were also

brought back into focus following Moody's credit rating

downgrade of the United States and weak debt auctions in the

U.S. and Japan last week.

Inflation reports come from Japan and Germany later this

week, along with price data on U.S. goods and services.

China and Hong Kong stocks closed lower on Monday as

automobile shares slid on price war concerns and Apple ( AAPL ) suppliers

dropped on potential U.S. tariffs.

At the close, the Shanghai Composite index weakened

0.1% while the blue-chip CSI300 index dropped 0.6%.

In Japan, Nikkei 225 closed 1% higher, its sharpest

one-day advance in almost two weeks, after Trump appeared to

give his blessing to Nippon Steel's ( NISTF ) takeover of U.S.

Steel.

Japanese government bonds also rallied, following a dramatic

week in which super-long yields hit record levels last week.

Super-long Japanese bonds will be in focus, with inflation

data expected later in the week as investors try to gauge the

Bank of Japan's monetary policy outlook.

On the commodities front, Brent and U.S. crude prices

traded 12 and 6 cents higher, respectively to

$64.90 and $61.29, while gold eased from a two-week high

to $3,328 an ounce.