GLOBAL MARKETS-Stocks offer muted cheer to latest US-China trade detente

By Wayne Cole

SYDNEY, June 11 (Reuters) - Stock markets and the dollar gave a guarded welcome on Wednesday to the latest signs of progress in U.S.-China trade talks, while awaiting more detail of what was decided and whether it would stick for long.

Bond investors were also hunkered down for a reading on U.S. inflation that could show the early impact of tariffs on prices, and a Treasury auction that will test demand for the country's debt.

In London, negotiators from Washington and Beijing said they had "agreed a framework on trade" that would be taken back to their leaders.

U.S. Commerce Secretary Howard Lutnick said the implementation plan should result in restrictions on rare earths and magnets being resolved, but again offered no specifics.

"Even though details are scant, as long as the two sides are talking, I think markets will be happy," said Carol Kong, a currency strategist at Commonwealth Bank of Australia.

"It will still be very hard and it will take a long time for both sides to reach a comprehensive trade agreement," she added. "That sort of comprehensive deal usually takes years to be reached, so I'm sceptical that a framework reached at the meeting in London will be comprehensive."

The law was another hurdle as a federal appeals court allowed President Donald Trump's most sweeping tariffs to remain in effect on Tuesday while it reviews a lower court decision blocking them.

Investors, who have been badly burned by trade turmoil before, offered a cautious response with S&P 500 futures ESc1 and Nasdaq futures NQc1 both down 0.3%.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 0.5%. Japan's Nikkei .N225 added 0.5% and Australian stocks .AXJO firmed 0.1%.

Hopes for policy stimulus and foreign demand helped South Korean shares .KS11 climb 0.9% to a near 3-1/2-year high. Chinese blue chips .CSI300 gained 0.8%, while the yuan held at 7.1869 per dollar CNH=.

European bourses were more restrained as EUROSTOXX 50 futures STXEc1 eased 0.4%, while FTSE futures FFIc1 dipped 0.2% and DAX futures FDXc1 0.6%.

AUCTION ANGST

The reaction in currency markets was equally muted, with the dollar flat on the Japanese yen at 144.97 JPY=EBS. The euro edged down 0.1% to $1.1417 EUR=EBS, nudging the dollar index up to 99.115 =USD.

Bond investors had other things to worry about and yields on 10-year Treasuries US10YT=TWEB were little changed at 4.476%. An auction of $39 billion in 10-year notes is due later in the day and the market is anxious to see if foreign buyers turn up.

Concerns about huge U.S. budget deficits and debt have combined with unease over the White House's erratic trade policies to see investors demand a higher term premium for holding Treasuries.

Data on U.S. consumer prices for May might also show some initial upward pressure from tariffs, though analysts assume it will take a few months to fully show in the series.

Median forecasts are for the headline CPI to rise 0.2% and the core 0.3%, which would nudge the annual rates up to 2.5% and 2.9%, respectively.

Anything higher would be a setback to hopes for another rate cuts from the Federal Reserve and could see bonds sell off. Markets imply little chance the Fed will ease at its meeting next week or in July, but have priced around a 60% chance of a move in September. 0#USDIRPR

In commodity markets, gold gained 0.6% to $3,341 an ounce XAU=. GOL/

Oil prices eased from near seven-week highs ahead of U.S. inventory data. O/R

Brent LCOc1 dropped 10 cents to $66.77 a barrel, while U.S. crude CLc1 eased 4 cents to $64.94.

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