By April Joyner
NEW YORK (Reuters) - Hopes for a thaw in the U.S.-China trade war helped a gauge of global stocks rise on Friday despite a tepid performance on Wall Street, though caution over pending American tariffs on Chinese goods put the yuan on track for its biggest monthly decline in 25 years.
Statements from U.S. President Donald Trump and China's commerce ministry on Thursday that the countries were scheduling trade talks brought some respite to equities, which have been roiled by the escalating trade war.
The pan-European STOXX 600 ended 0.7% higher, helped by a surge in German real estate shares. The MSCI All-Country World Index rose 0.35%. Emerging markets shares also jumped 1.5%, posting their biggest daily percentage gain since June.
On Wall Street, the Dow Jones Industrial Average rose 41.03 points, or 0.16%, to 26,403.28, the S&P 500 gained 1.88 points, or 0.06%, to 2,926.46 and the Nasdaq Composite dropped 10.51 points, or 0.13%, to 7,962.88.
Despite the day's gains, MSCI's gauge of global stocks posted its second monthly loss of the year and its biggest August percentage decline since 2015.
Some market watchers expressed caution given the fluctuating rhetoric and said U.S. markets, which will be closed on Monday for the Labor Day holiday, could be especially vulnerable if trade tensions re-escalate over the long weekend. The Trump administration on Sunday is scheduled to begin collecting 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and many types of footwear.
China's yuan fell 0.27% to 7.1616 per dollar and was on track for its weakest month since Beijing's currency reform in 1994.
"Frankly, markets have been overly optimistic about trade," said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas. "I would caution people to be a little careful because optimism won't last if it doesn't ultimately materialize into something substantive like an agreement."
Benchmark U.S. Treasury yields fell, with the yield curve between 2-year and 10-year notes still inverted, seen as a signal that a recession is likely in one to two years.
Ten-year Treasury notes last rose 4/32 in price to yield 1.5028%, from 1.516% late on Thursday.
Italian bond yields registered one of their biggest monthly decline in more than six years after the anti-establishment 5-Star Movement and opposition Democratic Party reached an agreement on a coalition government.
Among currencies, the euro reached its weakest level since May 2017 as expectations grew for aggressive easing by the European Central Bank following weak economic data on Thursday. The euro was last 0.57% lower at $1.10.
Argentina's peso slumped 2.8% on Friday after Standard & Poor's cut the country's long-term credit rating. In August, the peso logged its biggest-ever monthly percentage drop.
The dollar index rose 0.31%.
The safe-haven Japanese yen rose 0.24% to 106.24 per dollar and was on track for its biggest monthly gain since May.
Sterling fell 0.18% to $1.2166 ahead of a crucial period for the British parliament before it is suspended ahead of Britain's scheduled exit from the European Union on Oct. 31.
In commodities, spot gold fell 0.25% to $1,523.55 an ounce but was set for its fourth straight month of gains. Silver rose 0.59% to $18.35 per ounce and was on track for its biggest monthly percentage gain since June 2016.
Oil prices fell on concerns that disruption from Hurricane Dorian, headed for Florida, could dampen demand. U.S. crude settled 2.84% lower at $55.10 a barrel, while Brent settled at $60.43 a barrel, down 1.06% on the day.
(Reporting by April Joyner; Additional reporting by Stephanie Kelly and Kate Duguid in New York, Akanksha Rana, Shreyashi Sanyal and Asha Sistla in Bengaluru, Karin Strohecker, Saikat Chatterjee and Josephine Mason in London and Swati Pandey in Sydney; Editing by Dan Grebler, David Gregorio and Will Dunham)