GLOBAL MARKETS-Stocks muted, dollar steady on latest US-China trade detente

By Lawrence White

LONDON, June 11 (Reuters) - Stocks were subdued and the dollar steady on Wednesday amid a lack of detail from U.S.-China trade talks that promised high-level agreement but appeared to do little to resolve longstanding tensions between the world's biggest economies.

Bond investors were also hunkered down for a reading on U.S. inflation due at 8:30 a.m. ET (1230 GMT) 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 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 said.

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.

Billionaire Elon Musk also said he regretted some of the posts he made last week about Trump, opening the way to a healing of an abrupt rift that has roiled Washington and hurt shares in Musk's Tesla TSLA.O.

Investors in U.S. stocks, who have been badly burned by trade turmoil before, remained cautious, with S&P 500 futures ESc1 and Nasdaq futures NQc1 both down 0.2%.

Asian shares were slightly more positive, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 0.6%, while the STOXX benchmark for major European shares .STOXX edged down 0.1%.

AUCTION ANGST

The reaction in currency markets was equally muted, with the dollar strengthening slightly against the Japanese yen to trade at 145.15 JPY=EBS. The euro edged down 0.1% to $1.1433 EUR=EBS, nudging the dollar index up to 99.041 =USD.

Bond investors also waited for an auction of $39 billion in 10-year notes later in the day, anxious to see if foreign buyers turn up. Ten-year Treasury yields US10YT=TWEB were little changed at 4.4977%.

Concerns about huge U.S. budget deficits and debt have combined with unease over the White House's shifting policies to make 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 consumer price index 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 more 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 0.24% to $3,329 an ounce XAU=. GOL/

Oil prices rose to a seven-week high as markets assessed the outcome of the U.S.-China trade talks. O/R

Brent LCOc1 crude futures rose 82 cents to $67.69 a barrel, while U.S. crude CLc1 was up 96 cents to $65.94.

      
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