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Canada rescinds tax to keep US trade talks going

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Dollar stays soft ahead of payrolls test

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US tax and spending bill crawls through Senate

(Updates to morning U.S. trading)

By Chuck Mikolajczak

NEW YORK, June 30 (Reuters) - Global stocks were higher

on Monday on hopes U.S. trade negotiations with key partners

would continue to progress, while the dollar slipped and was on

track for its worst first half performance in over 50 years.

Canada halted its digital services tax targeting U.S.

technology firms just hours before it was due to take effect, in

a effort to advance stalled trade negotiations with Washington.

Canadian Prime Minister Mark Carney and U.S. President

Donald Trump will resume trade negotiations in an attempt to

agree on a deal by July 21, in an extension from Trump's

original July 9 deadline for "reciprocal" tariffs.

The July 9 deadline still holds for other countries,

although officials have suggested most deals could now be done

by the September 1 Labor Day holiday.

On Monday, U.S. Treasury Secretary Scott Bessent said

countries "should be aware" that the U.S. could move back to the

tariff levels on April 2, when Trump announced a wide array of

steep duties against countries around the globe, and that the

decision for any extension to negotiations would be up to Trump.

"We've got this deadline coming, but then Trump has said

that the deadline can be moved. And then you've got markets

thinking that the Fed could potentially cut interest rates

sooner than later. So there are a lot of drivers here," said

Dennis Dick, a trader at Triple D Trading in Ontario, Canada.

"Investors are just confident here in this market right now,

because we've had some bad news come in, even some bad earnings

reports, and they buy the stocks right back. So bulls remain in

complete control."

On Wall Street, U.S. stocks rose modestly after the S&P 500

and Nasdaq closed at record highs on Friday, led by gains in

financial names, while utilities were the

worst performing of the 11 major S&P sectors.

The Dow Jones Industrial Average rose 108.95 points,

or 0.25%, to 43,928.53, the S&P 500 rose 8.91 points, or

0.14%, to 6,181.98 and the Nasdaq Composite rose 30.67

points, or 0.15%, to 20,302.84.

Investors will eye a flurry of labor market data in the

holiday-shortened trading week, culminating in Thursday's

government payrolls report. The report is scheduled for release

a day early, while the U.S. stock market will have a shortened

session on Thursday and be closed on Friday due to the

Independence Day holiday on July 4.

Some Fed officials, including Chair Jerome Powell, have said

the strength of the labor market gives the central bank the

leeway to hold off on cutting interest rates until they can get

a better sense of the impact Trump's tariffs will have on

inflation.

Federal Reserve Bank of Atlanta President Raphael Bostic

said Monday that the economy has yet to face the full impact of

Trump's trade tariffs.

Investors were also monitoring the progress of a huge U.S.

tax-cutting and spending bill slowly making its way through the

Senate, which Republicans will try to pass on Monday.

The Congressional Budget Office estimated the bill would add

$3.3 trillion to the nation's debt over a decade, testing

foreign appetite for U.S. Treasuries.

MSCI's gauge of stocks across the globe rose

0.98 points, or 0.10%, to 915.73 and was on track for its third

straight session of gains after hitting an intraday record of

916.44.

The pan-European STOXX 600 index fell 0.29%, but

was poised for its second straight quarterly advance despite

dropping more than 1% in June.

The dollar index, which measures the greenback

against a basket of currencies, fell 0.14% to 97.06, with the

euro up 0.24% at $1.1747.

The greenback has struggled throughout the year, partly due

to growing expectations the Fed may become more aggressive in

cutting interest rates next year when Powell is replaced as

Chair. The dollar is down 10.5% for the first half, which would

mark its biggest drop over the first six months of the year

since 1973, when the U.S. shifted to a free-floating exchange

rate.

The yield on benchmark U.S. 10-year notes fell

0.8 basis points to 4.275%.

U.S. crude fell 0.96% to $64.89 a barrel and Brent

fell to $67.55 per barrel, down 0.32% on the day.

To read Reuters Markets and Finance news, click on https://www.reuters.com/finance/markets

For the state of play of Asian stock markets please click on:

(Additional reporting by Sruthi Shankar and Nikhil Sharma in

Bengaluru. Editing by Mark Potter)