* 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 next test for rising bond yields
* Dollar dips, sterling builds on strongest day of the year
* Graphic: World FX rates in 2018 By Marc JonesLONDON, Nov 2 (Reuters) - World share markets soared onFriday as hopes built that the United States and China werestarting to repair their badly damaged trade relations.Those hopes rose after a phone call between U.S. PresidentDonald Trump and Chinese President Xi Jinping ,triggering a global surge in risk appetite. Metals and swathesof trade-sensitive currencies and bond markets gained, but itwas equities that saw the most explosive action."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.A jubilant Asian session, which included 2.5 to 4 percentgains for most of region's big markets, put emerging-marketstocks up 3 percent and on course for their best dayand week since early 2016. In Europe, Germany's export-heavy DAX jumped 1.5percent in its best start since July. Wall Street futures were also up almost 1 percent before the monthly installment ofthe U.S. non-farm payrolls report. A Reuters poll shows economists expect a 190,000 rise inU.S. jobs and 0.2 percent increase in hourly earnings, after a0.3 percent increase in September. Those numbers will follow data this week that showed slowingfactory growth around the world, but for the day at least thoseworries were being soothed by the brighter U.S.-China mood.The other focus is whether strong U.S. earnings reports push10- and 30-year U.S. bond yields up towards 3.5 percent. European bond yields were rising. In currency markets, the dollar diped to a week-low ,though it held its ground against the safe-haven yen at 113.00yen .
China's yuan strengthened to a high of 6.9092 per dollar inonshore markets and also gained in offshore trade , pulling away from the sensitive 7 to the dollar level.The euro edged up 0.15 percent to $1.1426 . TheAustralian dollar gained 0.5 percent to $0.7240 andsterling rose to $1.30 on hopes London is closing in ontransitional deal for when it leaves the EU next year.If the pound doesn't skid later it will be its second-bestweek of the year so far. Thursday was its best day of the year. "Were it not for Brexit uncertainty, the Bank of Englandwould probably have laid the groundwork (at its meeting onThursday) for its next rate hike," BNP Paribas analysts said ina note.
SOUR APPLE
The expected rise for Wall Street is likely to be tempered byApple shares , which tumbled 5.6 percent in premarkettrading after it warned on Thursday about its upcoming holidayseason sales. In an interview with Reuters, Apple CEO Tim Cook said someof the forecast disappointment was explained by releasing itstop-end iPhone models, the XS and XS Max, in the fiscal fourthquarter.
Cook also said foreign exchange rates would have a $2billion negative impact on Apple's sales forecast. Cook addedthe firm was also "seeing some macroeconomic weakness in some ofthe emerging markets," although he didn't specify which ones.The tech sector has taken a beating on Wall Street over thelast month and Apple's weak forecast fed into the same investorfears that have caused shares of Facebook , Amazon and Google to tumble.In commodity markets, industrial metals led the charge onthe hopes a Trump-Xi trade deal would prevent China'sresource-hungry economy faltering.Three-month copper on the London Metal Exchange climbed as much as 2.8 percent to $6,264 a tonne, its highest ina week.Other base metals were up across the board too, with zinc rising 2.5 percent, nickel climbing 2.9 percent,lead up 3.1 percent and aluminum gaining 1.9percent. Oil prices were less energetic but had managed to reverseearly Asian losses, with U.S. crude last at $63.51 abarrel and Brent crude a touch higher at $72.99. They were restrained by a report that the U.S. governmenthas agreed to let eight countries, including close allies SouthKorea and Japan, as well as India, keep buying Iranian oil afterit re-imposes sanctions. "Oil prices look to remain under pressure, as fears ofglobal oversupply have returned with a vengeance," said AshleyKelty, oil and gas research analyst at Cantor Fitzgerald Europe.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^World shares bounce after bear mauling ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional Reporting by Tommy Wilkes and Christopher Johnsonin London, Andrew Galbraith in Shanghai and Hideyuki Sano inTokyo, editing by Larry King)
Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net