* World and European indexes at 3-week high
* Samsung profit warning weighs on Asia
* Dollar ticks up, euro hit by weak German data
* Bond yields resume rise in Europe, U.S. markets
* Oil stays firm in commodity markets
* Graphic: World FX rates in 2019 By Marc JonesLONDON, Jan 8 (Reuters) - A strong day for Europe and a jumpin Wall Street futures kept world stocks at a three-week high onTuesday, after Asia was knocked back by a shock profit warningfrom tech giant Samsung.
Hopes that Washington and Beijing may be moving towards atrade deal helped the mood againandalso gave the dollar a lift in the currency markets after itsshaky start to the year.That rise, along with the alarm from South Korea's Samsungthat it would badly miss its earnings forecasts ,caused a slip in emerging markets, but Europe held its nerve --unlike last week after a similar warning from Apple.The pan-European STOXX 600 rose 1.5 percent despitesome wobbles in Italy as Rome stepped in to support another ofits struggling lenders . Britain's FTSE was up 1.2percent too as its retailers cheered rare good news aboutChristmas trading."I think the market has been quite extreme in pricingrecession risks, so I think we have value now in both the equityand bond markets," SEB investment management's global head ofasset allocation Hans Peterson said.
"The discussions between the U.S and China will take sometime but I think the markets are prepared to move in the rightdirection on positive signals."
U.S. President Donald Trump tweeted ahead of the start ofWall Street trading that talks with China, which were going intoa second day, were going "very well". U.S. Commerce Secretary Wilbur Ross had predicted on Mondaythat Beijing and Washington could reach a trade deal that "wecan live with" S&P 500 futures gained 0.8 percent following a nearfour percent surge on Wall Street since Friday, led by Amazon and Netflix which have been recovering some ofthe ground they lost during a brutal end to 2018. MSCI's broadest index of Asia-Pacific shares ended down 0.2 percent, however. It was dragged lower by fallsin South Korea due to Samsung and in China where government bondyields also saw their biggest daily gain in nine months China's Foreign Ministry said Beijing had "good faith" towork with the United States to resolve trade friction, but manyanalysts doubt the two sides can reach a comprehensive agreementon all of the issues before a March deadline."Various concerns markets had earlier are receding for now.Still, there's no denying that U.S. (company) earnings momentumis slowing," said Hirokazu Kabeya, chief global strategist atDaiwa Securities."Ultimately we need to see whether upcoming earnings reportscan dispel market concerns."
DOLLAR STIRS
The dollar has its tail up , trading at 108.90 yen and $1.1431 to the euro as an unexpected fall in Germanindustrial output for the third straight month also helped toweaken the euro zone currency. The British pound traded a tad lower at $1.2741 asBritish and European officials played down a report in the DailyTelegraph newspaper on plans to extend Britain's formal Article50 notice to withdraw from the European Union. "I wouldn't really want to think about the possibility ofextending Article 50 here and now," saidI don't think this iswhat we ought to focus on today," German Foreign Minister HeikoMaas told journalists during a visit to Dublin. Elsewhere, the Canadian dollar hit one-month highs, havinggained 2.7 percent in the past five days on gains in oil pricesand on speculation the Bank of Canada will raise interest ratesagain this week. It last stood at 1.3272 per U.S. dollar .
In the government bond markets, Europe's yields weresqueezed higher by a deluge of upcoming debt sales and the10-year U.S. Treasuries yield bounced back to 2.70percent, from Friday's near one-year low of 2.543 percent.Still, its latest level is still 50 basis points below itsOctober peak of 3.261 percent and recent caution from the headof the Federal Reserve mean futures markets are nowpricing in a slim chance of a U.S. rate cut this year.Oil prices were also up again on Tuesday, supported by hopesfor Sino-U.S. trade talks in Beijing and a Wall Street Journalreport that Saudi Arabia is planning to cut crude exports toaround 7.1 million barrels per day (bpd) by the end of January.
Both U.S. West Texas Intermediate (WTI) crude futuresand International Brent crude futures stayed firm at$49.45 and $58.27 per barrel, respectively, while safe-havengold eased back to $1,283 an ounce.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^U.S. earnings growth since 1968 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Marc Jones, Editing by Jane Merriman and AlisonWilliams, William Maclean)
Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net