*

Rising Middle East tension dents sentiment, lifts oil,

gold

*

Markets give lukewarm reception to US-China truce

agreement

*

Trump's latest tariff salvo unnerves investors

*

Soft US CPI sets stage for Fed meeting next week

(Updates to Asia afternoon trading)

By Ankur Banerjee and Johann M Cherian

SINGAPORE, June 12 (Reuters) - Global stocks and the

dollar slipped on Thursday as investors sized up a benign U.S.

inflation report and the fragile trade truce between Washington

and Beijing, while rising tensions in the Middle East and

lingering tariff anxiety dented risk sentiment.

European stocks looked set to open lower, with

futures tracking Germany's DAX and London's FTSE 100

down 0.8% and 0.4%, respectively. Contracts tracking

Wall Street's S&P 500 pointed to a lacklustre start as

well.

Attention in financial markets this week has been on the

U.S.-China trade talks which culminated in a framework agreement

that would remove Chinese export restrictions on rare earth

minerals and allow Chinese students access to U.S. universities.

"We made a great deal with China. We're very happy with it,"

said U.S. President Donald Trump. Markets though were guarded in

their response, awaiting fuller, concrete details of the

agreement and remained wary of another flare up.

Stocks in Europe and the U.S. were also taking a breather

after a rally over the past few sessions brought them closer to

record-high levels logged earlier this year.

Adding yet another dose of uncertainty in the markets, Trump

said the U.S. would send out letters in one to two weeks

outlining the terms of trade deals to dozens of other countries,

which they could embrace or reject.

"Markets may have no choice but to respond to Trump's tariff

threat-even if it's just posturing to bring others to the table.

The gap between "risk-on" positioning and real-world risks has

stretched too far," said Charu Chanana, chief investment

strategist at Saxobank.

In Asia-Pacific, MSCI's broadest index tracking stocks in

the region excluding Japan slipped 0.2%, after

hitting a three-year-high on Wednesday, while Japan's Nikkei

slipped 0.5%.

Chinese and Hong Kong stocks were also

taking a pause after touching multi-week highs in the previous

session.

Trump's erratic tariff policies have roiled global markets

this year, prompting hordes of investors to exit U.S. assets,

especially the dollar, as they worried about rising prices and

slowing economic growth.

The euro, one of the beneficiaries of the dollar's

decline, touched a seven-week high and was last at $1.1525. The

Japanese yen was 0.4% firmer at 143.85 per dollar.

That pushed the dollar index, which measures the U.S.

currency against six others, to its lowest level since April 22.

The index is down 9% this year.

INFLATION WORRIES

Data on Wednesday showed U.S. consumer prices increased less

than expected in May, but inflation is expected to accelerate in

the coming months on the back of the Trump administration's

import tariffs.

AMP Capital's head of investment strategy and chief

economist, Shane Oliver, said the higher prices will flow

through either in the form of higher inflation or lower profit

margins.

"I suspect it's probably going to be a combination of the

two. Therefore it makes sense for the Fed to wait and see what

happens rather than rushing into a rate cut."

Later in the day, the focus will be on a producer inflation

report as some of the components feed into the Fed's preferred

inflation gauge - the Personal Consumption Expenditure Index.

Policymakers are widely expected to keep rates unchanged

next week and traders instead are pricing in a 70% chance of a

quarter-point reduction in the Fed policy rate by September.

In the UK, investors assessed a report that showed economic

output contracted by a worse-than-expected 0.3% in April on a

monthly basis.

In commodities, oil prices were pinned at two-month highs,

close to $70 a barrel, on worries of supply disruptions in the

Middle East after Iran said it will strike U.S. bases in the

region if nuclear talks fail and conflict arises with

Washington.

Gold prices also got a boost from safe-haven flows, with

spot gold up 0.6% at $3,372.29.

(Reporting by Ankur Banerjee and Johann M Cherian; Editing by

Shri Navaratnam and Muralikumar Anantharaman)