(Updates with close of European markets)

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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

By Chuck Mikolajczak

NEW YORK, June 30 (Reuters) - Global stocks edged up to

hit an intraday record on Monday on hopes U.S. trade

negotiations with key partners would continue to progress, while

the dollar declined and was on track for its worst first half

performance in more than five decades.

Canada halted its digital services tax targeting U.S.

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

an 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.

On Wall Street, U.S. stocks rose modestly to build upon the

record closing levels on Friday, led by gains in financial names

, while consumer discretionary was the worst

performing of the 11 major S&P sectors.

"There's hope that eventually there will be some sort of

accordance with U.S. trading partners and that the slowness in

economic activity will prevent inflation from getting out of

hand," said Peter Cardillo, chief market economist at Spartan

Capital Securities.

The Dow Jones Industrial Average rose 146.03 points,

or 0.34%, to 43,967.14, the S&P 500 rose 10.13 points, or

0.17%, to 6,183.75 and the Nasdaq Composite rose 15.44

points, or 0.09%, to 20,291.55.

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 and said he still sees one cut from the

Fed this year, while Chicago Federal Reserve Bank President

Austan Goolsbee said he sees no sign of stagflation but there is

the possibility of both unemployment and inflation getting worse

simultaneously.

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

1.49 points, or 0.16%, to 916.25 and was on track for its third

straight session of gains after hitting an intraday record of

9167.05.

The pan-European STOXX 600 index closed down 0.42%, but

secured its second straight quarterly advance despite dropping

more than 1% in June.

The dollar index, which measures the greenback against a

basket of currencies, declined 0.32% to 96.88, with the euro

up 0.47% at $1.1774.

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.

Against the Japanese yen, the dollar weakened 0.34% to

144.16 while sterling strengthened 0.01% to $1.3716.

The yield on benchmark U.S. 10-year notes fell 5.3

basis points to 4.23%.

U.S. crude fell 0.63% to $65.11 a barrel and Brent

fell to $67.63 per barrel, down 0.21% on the day.

(Additional reporting by Sruthi Shankar and Nikhil Sharma in

Bengaluru. Editing by Mark Potter and Chizu Nomiyama )