* U.S.-China trade deal hopes trigger risk rally
* Emerging market shares head for best day since early 2016
* Europe higher with Germany's DAX leading the charge
* Hong Kong, Korean markets have best day in seven years
* U.S. jobs data comes in strong
* Dollar steadies, sterling builds on strongest day of the year
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Nov 2 (Reuters) - World shares rallied on Friday on hopes that the United States and China were starting to repair their badly damaged trade relations, while bumper U.S. wage data helped the dollar regain some strength.
The signals on trade triggered a global surge in risk appetite that lifted metals and swathes of trade-sensitive currencies and bond markets, but it was equities that saw the strongest reaction. buoyant Asian session, where most of the major markets gained by 2.5 to 4 percent, put emerging market stocks .MSCIEF up 3 percent and on course for their best day and week since early 2016. EMRG/FRX
"When Trump wants to bump the market ahead of the mid-terms, the market likes it," said Saxo Bank's head of FX strategy, John Hardy, referring to next week's mid-term U.S. elections.
In Europe, Germany's export-heavy DAX .GDAXI jumped 1.5 percent in its best session since July. Traders, though, did trim back Wall Street futures gains ESc1 after a strong monthly U.S. non-farm payrolls report spurred rate rise expectations. .EU
U.S. job growth rebounded sharply last month and wages recorded their largest annual gain in 9-1/2 years, the data showed, pointing to further labour market tightening that could encourage the Federal Reserve to raise interest rates again in December. numbers contrasted with data this week showing slowing factory growth around the world, but for the day at least those worries were soothed by the brighter U.S.-China mood.
The focus now is on whether the strong jobs report, particularly the wages data, will help push 10- and 30-year U.S. bond yields up towards 3.5 percent.
The signs are that it could. European bond yields were already up before the data and the 10-year Treasury yield looked to be creeping higher again too. GVD/EUR
The figures also helped the dollar claw off a week-low .DXY , and make some ground against the safe-haven yen at 113.00 yen JPY= .
China's yuan had earlier strengthened to a high of 6.9092 per dollar in onshore markets CNY=CFXS and also gained in offshore trade CNH=D4 , pulling away from the sensitive 7 to the dollar level.
The euro edged up 0.15 percent to $1.1426 EUR= and the Australian dollar gained 0.5 percent to $0.7240 AUD=D4 .
Hopes Britain is closing in on a transitional deal for when it leaves the EU next year pushed sterling higher to $1.30, after enjoying its best day of the year on Thursday.
If the pound doesn't skid later it will be its second-best week of the year so far. /GBP
"Were it not for Brexit uncertainty, the Bank of England would probably have laid the groundwork (at its meeting on Thursday) for its next rate hike," BNP Paribas (PA:BNPP) analysts said in a note.
SOUR APPLE
The expected rise on Wall Street is likely to be tempered by Apple shares AAPL.O , which tumbled 5.6 percent in premarket trading after the company warned on Thursday about its upcoming holiday season sales. an interview with Reuters, Apple CEO Tim Cook said some of the forecast disappointment was explained by releasing its top-end iPhone models, the XS and XS Max, in the fiscal fourth quarter.
Cook also said foreign exchange rates would have a $2 billion negative impact on Apple's sales forecast. Cook added the firm was also "seeing some macroeconomic weakness in some of the emerging markets," although he didn't specify which ones.
The tech sector has taken a beating on Wall Street over the last month and Apple's weak forecast fed into the same investor fears that have caused shares of Facebook FB.O , Amazon AMZN.O and Google GOOGL.O to tumble.
In commodity markets, industrial metals led the charge on the hopes a Trump-Xi trade deal would prevent China's resource-hungry economy faltering.
Three-month copper on the London Metal Exchange CMCU3 climbed as much as 2.8 percent to $6,264 a tonne, its highest in a week.
Other base metals were up across the board too, with zinc CMZN3 rising 2.5 percent, nickel CMNI3 climbing 2.9 percent, lead CMPB3 up 3.1 percent and aluminium CMAL3 gaining 1.9 percent. MET/L
Oil prices were less energetic but managed to reverse early Asian losses, with U.S. crude CLc1 last at $63.51 a barrel and Brent crude LCOc1 a touch higher at $72.99. O/R
They were restrained by a report that the U.S. government has agreed to let eight countries, including close allies South Korea and Japan, as well as India, keep buying Iranian oil after Washington re-imposes sanctions. prices look to remain under pressure, as fears of global oversupply have returned with a vengeance," said Ashley Kelty, oil and gas research analyst at Cantor Fitzgerald Europe.
(Additional Reporting by Tommy Wilkes and Christopher Johnson in London, Andrew Galbraith in Shanghai and Hideyuki Sano in Tokyo, editing by Larry King and Susan Fenton)