*

Trump and Xi strike a deal over rare earths and tariffs

*

Fed's Powell hints 25 bps cut may be last of 2025

*

Tech earnings weigh on U.S. stocks

*

ECB expected to hold rates later

(Updates throughout)

By Amanda Cooper

LONDON, Oct 30 (Reuters) -

Global shares dipped on Thursday as investors remained

cautious after U.S. President Donald Trump said he had

made a deal

with Chinese President Xi Jinping, while the dollar rose

against the yen after the Bank of Japan left interest rates

unchanged.

After a near two-hour meeting with Xi, Trump said he had

agreed to reduce tariffs on imports from China in exchange for

Beijing resuming U.S. soybean purchases, keeping rare earths

exports flowing and cracking down on the illicit trade of

fentanyl.

Xi urged further cooperation in comments carried by Chinese

state media after the meeting. China's Commerce Ministry later

said it would pause some countermeasures for a year.

Equity markets fell on concerns the truce may prove

fleeting. Previous trade negotiations have seen promising starts

followed by setbacks.

INVESTOR THUMBS-DOWN TO META, MICROSOFT ( MSFT )

Adding to the more downbeat tone in stocks, two of the

biggest U.S. tech companies reported earnings that disappointed

investors, leaving shares in Microsoft ( MSFT ) and Meta

down 3% and 7%, respectively, in the premarket.

In a heavy day for European earnings, the STOXX 600

fell 0.3%.

"A good Trump/Xi meeting was in the price for a while now,

over the past few days, the narrative on that was that it was

going to be a positive outcome, therefore, we've simply got

confirmation of that," Chris Scicluna, head of economic research

at Daiwa Capital Markets, said.

The dollar edged lower against most major

currencies, except the yen, after the Federal Reserve on

Wednesday cut interest rates,

as expected

. Yet, Chair Jerome Powell signalled that another cut in

December was not a certainty, which pushed up Treasury yields

and, with them, the U.S. currency.

Members of the Federal Open Market Committee (FOMC) had

gone into the meeting with far less visibility on the economy

than usual, as the U.S. government shutdown, now almost a month

old, has prevented the release of key data, including the

monthly employment report.

"It's understandable why the FOMC are hesitant over

whether or not a further rate cut in December, and maybe more in

next year, are really merited, when we have this evident froth

in stocks and a boom in AI which certainly has legs running into

2026," Scicluna said.

Traders have cut the chances of another quarter-point

cut from the Fed this year to around 70%, from closer to 90% on

Wednesday, according to the CME Group's FedWatch tool.

The yield on the U.S. 10-year Treasury bond

was last around a three-week high of 4.0776%, up 1.96 basis

points compared with a previous close of 4.058%.

DOLLAR RISES AGAINST YEN AFTER BOJ

The dollar index, a basket of six major

currencies, was up 0.1% at 99.075, near two-week highs, largely

due to gains versus the yen, which hit an eight-month

low against the dollar and a record low against the euro

.

The BOJ kept rates unchanged, as expected, and

reiterated its intention to gradually raise borrowing costs if

the state of the economy justifies that.

"The BOJ is tip-toeing towards a hike," Fred Neumann, chief

Asia economist at HSBC in Hong Kong, said. "With October a

missed opportunity to nudge rates higher, all eyes are now on

December, when a rate hike appears likely."

The yen had rallied earlier after remarks by U.S. Treasury

Secretary Scott Bessent calling for speedier rate hikes to avoid

weakening the currency too much.

By mid-morning in Europe, losses mounted for the yen,

leaving the dollar up 0.7% at 153.76 and the euro up as much as

0.87% at 178.7, the most since the launch of the single European

currency in 1999.

The euro was up 0.2% against the dollar at

$1.16215 ahead of a policy decision by the European Central Bank

later in the day, at which it is expected to leave rates on hold

for a third meeting in a row.

In corporate earnings,

Meta and Microsoft ( MSFT ) troubled investors with

increased spending on AI, leaving shares under pressure, while

rival and Google parent Alphabet beat revenue

expectations, sending its stock up 8%.

U.S. stock index futures fell 0.1%.

Gold rose 2% back above $4,000 an ounce.

(Additional reporting by Gregor Stuart Hunter in Singapore;

Editing by Kim Coghill, Jacqueline Wong and Andrew Heavens)