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Investors pin hopes on US-China trade deal

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Nikkei crosses 50,000 for first time; Europe stocks at

record

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Focus on Trump-Xi and central bank meetings, US megacap

earnings

(Updates throughout with comment, refreshes prices)

By Ankur Banerjee and Amanda Cooper

SINGAPORE/LONDON, Oct 27 (Reuters) - Global stocks

bounced on Monday, while safe-haven gold and bonds retreated, as

signs of cooling trade tensions between China and the U.S.

encouraged investors, marking a strong start to a week dominated

by central bank meetings and megacap earnings.

Top Chinese and U.S. economic officials on Sunday hashed out

the framework of a trade deal for U.S. President Donald Trump

and his Chinese counterpart Xi Jinping to decide on later this

week at a meeting in South Korea.

A trade deal would pause steeper U.S. tariffs and Chinese

rare earths export controls, helping ease some concerns among

investors that a trade truce between the world's two largest

economies might break down.

That sent stocks sharply higher in Asia, with indexes in

South Korea, Taiwan and Japan hitting

record highs. The upbeat mood spread to Europe, where shares

rose modestly across the board, leaving the STOXX 600

up 0.1% around record highs.

US STOCK FUTURES JUMP

"Investors will want to see confirmation that the trade

truce holds and that China's stimulus and reform signals

translate into tangible growth momentum," said Charu Chanana,

chief investment strategist at Saxo.

U.S. stock futures jumped, with Nasdaq futures up 1%

and those for the S&P 500 up 0.7%.

George Boubouras, managing director of K2 Asset Management,

said the market was content with the U.S.-China momentum in

recent days. "Over the past few months the market has been

looking through global tariff negotiations understanding that

some commentary can be a bit of theatre and noise."

Reflecting some of that optimism was a rise in the Chinese

yuan to a more than one-month high against the dollar

on Monday of 7.1091.

Prior to the market open, the People's Bank of China set the

official midpoint rate at 7.0881 per dollar, its

strongest since October 15, 2024, above a Reuters estimate

of 7.1146.

"If a deal is done based on today's reported details, the

yuan has scope for further gains," MUFG head of research Derek

Halpenny said.

"Better risk conditions and some improvement in global

growth expectations should result in the U.S. dollar weakening

as investors look at better prospects for non-dollar

currencies," he said.

Safe-haven gold fell 1.3% to $4,058 an ounce, while

U.S. Treasury prices also eased, leaving the benchmark 10-year

bond yield up 3.1 basis points at 4.027%.

Commodities, including soybeans, wheat and corn rose on trade

deal prospects.

CENTRAL BANK MEETINGS AWAIT

Investor focus this week will also be on central bank

meetings in Japan, Canada, Europe and the United States.

The Federal Reserve is widely expected to cut interest rates

by 25 basis points after data showed U.S. consumer prices

increased slightly less than expected in September, but the

government shutdown and its impact on data remain a concern.

The dollar was slightly higher at 152.87 yen,

hovering near a two-week high. The euro was flat at

$1.16277. The dollar index was flat at 98.92.

The European Central Bank and the Bank of Japan are both

broadly expected to hold rates steady later this week.

The BOJ is likely to debate whether conditions are right to

resume rate hikes as worries about a tariff-induced recession

ease, but political complications may keep it on hold for now.

FOCUS ON MEGACAP EARNINGS

The busiest part of the U.S. earnings season is upon us,

with megacaps Microsoft ( MSFT ), Apple ( AAPL ), Alphabet

, Amazon ( AMZN ) and Meta Platforms ( META ) all due

to report results this week.

While the profit edge of "Magnificent Seven" companies,

whose huge market capitalisations mean their shares dominate

equity indexes, over the rest of the index is narrowing, they

are still expected to post stronger results for this period.

A number of the megacap companies are also key players in

the artificial intelligence industry, enthusiasm for which has

been the main driver of stock market performance.

(Additional reporting by Ankur Banerjee in Singapore. Editing

by Stephen Coates and Mark Potter)