*

US stocks flat to higher, Dow out front

*

Gold down sharply as investors take profits

*

Trump-Xi meeting next week, traders hope for trade

resolution

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Nikkei extends record rally as Japan makes history with

first

female PM

(Updates to midday)

By Caroline Valetkevitch

NEW YORK, Oct 21 (Reuters) -

Major stock indexes edged higher on Tuesday after upbeat

results and forecasts from some top U.S. companies, while the

yen fell to a one-week low after conservative Sanae Takaichi was

elected as Japan's prime minister.

Gold prices were on track for the steepest daily fall in

five years as investors took profits after recent sharp gains.

Spot gold fell 5.44% to $4,118.49 an ounce.

U.S. President Donald Trump said he expected to reach a fair

trade deal with Chinese President Xi Jinping when the two meet

next week in South Korea, and played down the risks of a clash

over the issue of Taiwan.

The prospect of a resolution also helped bolster investor

sentiment, along with a deal between Australia and the United

States for the supply of rare earth materials.

In earnings, GM shares jumped after the company

raised full-year forecast, and Coca-Cola gained after the

company posted results that beat analysts' estimates.

But investors were still worried about a pullback in stocks

after recent record highs.

"I do think we're going to get a little bit of a pullback

before the year-end rally and maybe it'll be triggered by tech

earnings, maybe something with China-Trump, maybe geopolitical,"

said Thomas Hayes, chairman at Great Hill Capital LLC.

The Dow Jones Industrial Average rose 347.74 points, or

0.74%, to 47,054.32, the S&P 500 rose 14.96 points, or

0.22%, to 6,750.09 and the Nasdaq Composite rose 15.88

points, or 0.07%, to 23,006.42.

MSCI's gauge of stocks across the globe rose

0.67 points, or 0.07%, to 996.36.

The pan-European STOXX 600 index rose 0.21%.

Earlier, Japan's Nikkei share gauge closed at a record

high.

Traders bet that Takaichi's government could muddy the

interest rate outlook and bring about greater fiscal spending.

The dollar also rose against other currencies besides the

yen. The dollar index, which measures the greenback

against a basket of currencies including the yen and the euro,

rose 0.25% to 98.86, with the euro down 0.21% at $1.1615.

Against the Japanese yen, the dollar was last up 0.74% at

151.86.

U.S. Treasury yields eased as investors looked ahead to the

Federal Reserve's next moves.

The Fed could deliver as many as three rate cuts in the next

six months, based on market-based expectations, while the ECB,

which meets next week, is not expected to deliver a rate cut any

time soon.

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

2.7 basis points to 3.961%, from 3.988% late on Monday.

Investor confidence was hit hard last week as a clutch of

bad loans at

U.S. regional banks

ignited concern over credit risks that threatened to spill

into the broader markets. The prolonged

U.S. government shutdown

also weighed on risk assets.

U.S. crude rose 0.83% to $58.00 a barrel and Brent

rose to $61.59 per barrel, up 0.95% on the day.