*

Investors shrug off Moody's US credit downgrade

*

Super long Japanese government bond prices fall sharply

*

Dollar drifts as selloff in Treasuries eases

*

US share futures slightly lower

*

RBA cuts rates as expected, Aussie down 0.5%

*

CATL debuts in Hong Kong in world's biggest listing this

year

(Updates after European morning trading)

By Ankur Banerjee, Johann M Cherian and Alun John

SINGAPORE/LONDON, May 20 (Reuters) - World stocks rose

on Tuesday and Treasury yields steadied, allowing a bit of a

breathing room for the U.S. dollar as investors took stock of

the debt load of the world's biggest economy.

Investors were still processing Monday's market moves when

Treasuries initially sold off sharply on worries about the U.S.

fiscal position, and stocks struggled on Wall Street, before

both rebounded in late trading.

That calm was maintained in Asian and European trading,

where Europe's broad Stoxx 600 index gained 0.5%, and

Germany's Dax hit a record high, though S&P 500 share

futures dipped.

Moody's downgraded the U.S. credit rating late on Friday,

underscoring worries about the impact of a major tax cutting

bill proceeding through Congress, which faces a crucial vote

later this week.

The U.S. 10-year Treasury yield was last down 2

basis points at 4.45%, having hit a one-month high of 4.56% on

Monday, and the 30-year bond yield fell a similar

amount to 4.91% after hitting an 18-month high of 5.037% in the

previous session.

"The quick recovery was a bit of a surprise even though we

were in the camp of it only having a limited impact," said Mohit

Kumar, chief Europe economist at Jefferies. He said the

downgrade was not unexpected given concerns over U.S. debt and

deficits.

"What's really driving the market right now is people are

underweight risk, so that's why whenever you get dips the

natural tendency is to buy," he said.

Risk assets are those like stocks or corporate credit that

tend to appreciate when investors are optimistic about the

global economy.

However, in a sign of broader market nervousness, Japanese

super-long government bond yields soared to all-time highs on

Tuesday, with the immediate precipitating factor a poor auction

of 20-year securities.

The Japanese 20-year yield jumped as much as

15 bps to 2.555%, its highest since 2000, and the 30-year yield

hit a record high of 3.14%.

Japanese government bonds are no exception to the global

trend of rising yields, said Hirofumi Suzuki, chief currency

strategist at Sumitomo Mitsui Banking Corp.

"Market participants are ... assessing demand during each

auction, and stability remains elusive. I think that the upward

pressure is likely to persist for the time being."

UNEASY RBA

Global investors had a few other things to process too on

Tuesday, and the Australian dollar slipped 0.7% to

$0.6414 after the Reserve Bank of Australia lowered interest

rates as expected, citing a darker global outlook, though it

also remained cautious on further easing.

"With the RBA sounding increasingly uneasy, the path of

least resistance for the currency may remain lower," said Charu

Chanana, chief investment strategist at Saxo in Singapore.

"Especially if domestic data softens further or global risks

flare up again."

Elsewhere in Asia Pacific, China's blue-chip index

climbed 0.54% after its central bank cut benchmark lending rates

for the first time since October.

Also in the spotlight was a strong Hong Kong market debut

from CATL, with the Tesla battery supplier

closing up 16%. The company raised $4.6 billion in its Hong Kong

listing, the largest in the world this year.

Back in currency markets, the euro was steady at $1.1248,

holding onto Monday's 0.6% gain, and the dollar was

down 0.2% against the Japanese yen at 144.48, after sliding on

Monday.

In commodities, oil prices were choppy as investors tried to

get a grip on a potential breakdown in talks between the United

States and Iran over Tehran's nuclear activity and weakened

prospects of more Iranian crude supply entering the market.

Brent futures were last down 0.2% at $65.43 a barrel.

Gold was up 0.2% at $3,236 an ounce.