GLOBAL MARKETS-Relief rally peters out as traders try to grasp Trump's U-turns

By Alun John and Rae Wee

LONDON/SINGAPORE, April 24 (Reuters) - Stocks drifted on Thursday and a rebound in the dollar lost traction as investors grappled with the Trump administration's shifts on tariffs and the Federal Reserve's leadership.

Over the last week, U.S. President Donald Trump has rained attacks on Fed Chair Jerome Powell then retracted calls for his resignation, and left investors none the wiser on his ultimate position on tariffs for China despite many headlines.

The Trump administration would look at lowering tariffs on imported Chinese goods pending talks with Beijing, a source told Reuters on Wednesday.

Treasury Secretary Scott Bessent said high tariffs between the U.S. and China were not sustainable, but also said a reduction would not come unilaterally, echoing comments from White House spokesperson Karoline Leavitt.

China's commerce ministry said on Thursday the United States should lift all unilateral tariff measures against China if it "truly" wanted to solve the trade issue.

Hopes of easing tensions helped U.S. shares and the dollar to rally on Wednesday - both have been hit hard by the tariff plans - but the moves faded on Thursday. S&P 500 futures ESC1 and the broad European stocks index .STOXX were both down around 0.2%. .EU

The dollar was also weaker, down 0.7% against the Japanese yen JPY=EBS and Swiss franc CHF=EBS at 142.4 yen and 0.8253 francs, while the euro EUR=EBS gained 0.6% to $1.1379. FRX/

But investors generally were still struggling to process all that has happened, and what might still be to come.

"This always happens in messy markets, it becomes harder to price the tails versus the big central scenario of 'muddle through'," said Will Hobbs, head of UK multi asset wealth at Barclays Private Bank, referring to extreme events that are unlikely but can have dramatic effects.

"Right now, everyone is focused on the tariff story but we're not sure what the hit is, because obviously we don't know what the tariffs are."

"So we've got this large, still-to-be described hit coming down the pike, but not really showing up in hard data, which people are saying is because of front loading to get ahead of tariffs."

Longer-dated U.S. Treasuries, which have been particularly volatile in recent weeks, were calmer with Trump's reversal on Powell seen as easing the risk to U.S. monetary and fiscal credibility.

The 10-year yield US10YT=RR was last 4 basis points lower at 4.35%, a third session in a row of comparatively muted moves. The 30-year yield was down a similar amount at 4.79%. US30YT=RR US/

Markets are pricing in slightly more than 80 bps of U.S. rate cuts by December, though with the tariff uncertainty high traders are bracing for further swings there. 0#USDIRPR

Japan's Nikkei .N225 was a rare outperformer, up 0.5%. Reuters reported that Japanese tariff negotiator Ryosei Akazawa was making final arrangements to visit the United States from April 30 to hold a second round of talks with his counterpart.

In a surprise bit of positive economic news, German business morale rose in April, a survey showed on Thursday.

Earnings in the U.S. and Europe offered a mixed picture.

Gucci-parent Kering's shares dropped 4% PRTP.PA after reporting a bigger than expected fall in first quarter revenue.

Alphabet GOOGL.O earnings are due after the U.S. close.

Elsewhere, oil prices steadied after a fall in the previous session when sources said OPEC+ would consider accelerating its oil output increases in June.

Gold XAU= was heading back towards Tuesday's record high, last up 1.6% at $3,340.2 an ounce. GOL/