GLOBAL MARKETS-Stocks up, Treasury yields down on cooler inflation, US-China deal

By Lawrence Delevingne and Lawrence White

June 11 (Reuters) - Wall Street stocks gained and the dollar and U.S. Treasury yields dipped on Wednesday after President Donald Trump said a U.S.-China trade deal was done and a fresh report on U.S. consumer prices in May showed only a marginal increase.

A White House official said the agreement with China allows the U.S. to charge a 55% tariff on imported Chinese goods, including a 10% baseline "reciprocal" tariff, a 20% tariff for fentanyl trafficking and a 25% tariff reflecting pre-existing tariffs. China would charge a 10% tariff on U.S. imports, the official said. Trump also said that Beijing would supply magnets and rare earth minerals while the U.S. will allow Chinese students in its colleges and universities.

Separately, the Consumer Price Index (CPI) increased 0.1% in May amid cheaper gasoline after rising 0.2% in April, the U.S. Labor Department said on Wednesday, but inflation is expected to accelerate in the coming months on the back of the Trump administration's import tariffs.

Chris Zaccarelli, chief investment officer for Northlight Asset Management in Charlotte, said the likely U.S. China trade deal and consumer price data should support markets.

"The narrative around tariff-induced inflation should subside," he wrote in an email. "We are still cautious, but many of the risks that were present in early April appear to be receding."

The Dow Jones Industrial Average .DJI gained 0.4%, the S&P 500 .SPX advanced 0.3%, and the Nasdaq Composite <.IXIC> rose 0.4%.

Tesla TSLA.O shares added about 2% after 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 the electric carmaker.

Asian shares were slightly more positive, with MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS up 0.65%, while the STOXX benchmark for major European shares .STOXX were little changed.

AUCTION ANGST

The reaction in currency markets was muted, with the dollar weakening slightly against the Japanese yen to trade at 144.83 JPY=EBS. The euro edged up 0.46% to $1.147 EUR=EBS, nudging the dollar index down 0.24% to 98.72 =USD.

Ten-year Treasury yields US10YT=TWEB fell 3.4 basis points to 4.44%, but 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.

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.

Following the consumer pricing data, traders of short-term interest-rate futures priced in a 70% chance of a quarter-point reduction in the Fed policy rate by September, compared with 57% earlier. Policymakers are widely expected to keep rates unchanged next week. 0#USDIRPR.

"Another month goes by with little evidence of tariffs, but the longer-term inflation challenge they pose remains," Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management, wrote in an email. "Given the Fed likely shares that outlook, no one should be looking for rate cuts in the near future."

In commodity markets, gold gained 0.5% to $3,337 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

U.S. crude CLc1 rose 2% to $66.30 a barrel and Brent LCOc1 rose to $68.04 per barrel, up 1.75% on the day.