* World stocks up 0.2 pct, China shares rise
* Tariffs on Chinese goods kick in, Beijing retaliates
* Economic barometer copper falls
* Market volatility falls even as uncertainty rises
By Saikat Chatterjee
LONDON, July 6 (Reuters) - Stocks rose and the euro climbed to a three-week peak as the imposition of tariffs by the United States and China on billions of dollars of trade was absorbed calmly by markets on Friday, though concerns about the conflict escalating capped appetite for risk.
World stocks .MIWD00000PUS rose 0.2 percent to their highest level in a week while Asian stocks .MIAPJ0000PUS climbed nearly half a percent led by a rebound in Chinese shares.
MSCI's main European Index .MSER edged a quarter of a percent higher and held below a two-week peak partly on cautious hopes of a rapprochement between the United States and Europe on auto trade tariffs.
U.S. equities Esc1 looked set for a more cautious start, however, with stock futures down 0.2 percent. Investors are looking at monthly U.S. jobs data after U.S. Federal Reserve minutes released overnight showed policymakers expressing concerns about the economy. of nervousness about the trade outlook were also evident elsewhere in global markets with the Japanese yen JPY=EBS and the Swiss franc CHF=EBS firm against the dollar while core U.S. and German bonds in demand.
"Trade war concerns have shot up to the top of our concerns for investors," said Isabelle Mateos y Lago, chief multi-asset strategist at BlackRock Investment Institute in London.
"We have to be aware that we are only one tweet away from much broader tariffs becoming a reality," she said, adding that investors were trimming back broad exposure to riskier assets.
Latest flows data confirm that trend. Investors have pulled money out of emerging markets and European equities faster than in 2016 over the last two months, Bank of America (NYSE:BAC) Merrill Lynch strategists said on Friday in a weekly note. United States and China slapped tit-for-tat duties on $34 billion worth of the other's imports on Friday, with Beijing accusing Washington of triggering the "largest-scale trade war" as the world's two biggest economies sharply escalated their conflict. UNCERTAINTY, LESS VOLATILITY
But despite the threat of more tariffs, global markets remained broadly sanguine with gauges of market volatility in equities and currencies edging lower this week.
For example, implied volatility EUR3MO= , a measure of expected market swings on the euro/dollar, has fallen to a one-month low this week while a market gauge on U.S. equities .VIX has edged lower.
"What can definitively be said that we are entering a period of much greater uncertainty than before though this low volatility in markets is baffling," said Neil Mellor, a senior currency strategist at BNY Mellon in London.
In currency markets, the euro EUR=EBS took cues from broadly firmer stocks and rose 0.1 percent on the day to a fresh three-week high at $1.1727 with broadly strong German industrial data also helping.
The Chinese yuan CNY=CFXS weakened after choppy trade, keeping some distance from 11-month lows touched earlier this week while the dollar .DXY edged lower against a basket of currencies with U.S. jobs data later ahead eyed.
The U.S. Labor Department is expected to report non-farm payrolls grew by 195,000 in June after surging by 223,000 in May. Monthly average hourly earnings probably rose 0.3 percent, taking the annual increase to 2.8 percent from 2.7 percent in May.
"Any misses in today's data could spur a wave of profit-taking - given signs that the USD rally looks to be running out of steam," said analysts at ING.
U.S. President Donald Trump has warned the United States may ultimately target over $500 billion worth of Chinese goods, an amount that roughly matches its total imports from China last year.
Copper CMCU3 , seen as a barometer of the world's economic strength because of its wide industrial use, on Friday fell to near a one-year low, at $6,221.50 per tonne, before recouping some losses.
The two-year U.S. Treasury yield US2YT=RR , which rises with traders' expectations of higher Fed fund rates, was at 2.553 percent compared with a U.S. close of 2.561 percent.
U.S. crude CLc1 stood 0.2 percent higher at $73.09 a barrel. Brent crude LCOc1 was almost flat at $77.42 per barrel.
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