GLOBAL MARKETS-Hopes for U.S.-China trade, soft Brexit boost shares

World stocks rose for a fifth session on Wednesday amid optimism over U.S.-China trade talks and for a softer British exit from the European Union, while oil prices retreated after an unexpected rise in inventories. U.S. stocks climbed in early trading after White House economic adviser Larry Kudlow said on Tuesday China and the United States expect to make more headway in trade talks this week. In addition, the Financial Times reported the two sides were drawing closer to a deal.

Still, U.S. economic data kept gains on Wall Street in check, as a gauge of the labor market showed private employers added fewer jobs than anticipated in March while a separate report showed services sector activity slowed to a more than 1-1/2-year low, highlighting a loss of momentum in the economy. "The market has been anticipating positives there for a while now; there are some positives built in here, but we can get some further upside in the market depending on the magnitude of this particular agreement," said Scott Wren, senior global equity strategist at Wells Fargo Investment Institute in St. Louis, Missouri.

The Dow Jones Industrial Average rose 4.79 points, or 0.02%, to 26,183.92, the S&P 500 gained 6.28 points, or 0.22%, to 2,873.52 and the Nasdaq Composite added 48.44 points, or 0.62%, to 7,897.13. MSCI's gauge of stocks across the globe gained 0.74%.

Aside from trade optimism, European shares were lifted by data out of China that showed activity in its services sector hit a 14-month high and the latest plan by British Prime Minister Theresa May to reach a deal on Brexit. In addition, euro zone retail sales were better than expected in February. "As far as China and the Euro zone, the market just wants stabilization," said Wren.

With a fourth straight day of gains, European stocks closed at an eight-month high. The pan-European STOXX 600 index rose 1.01%. Britain's May was set to seek a Brexit compromise with opposition leader Jeremy Corbyn, a bet that could see a European Union divorce deal finally clear parliament but also rip her party apart.

Sterling climbed on the hopes for a Brexit solution while the trade optimism bolstered risk appetite and sent the euro higher against the dollar. The dollar index, tracking the unit against six major currencies, fell 0.33%, with the euro up 0.39% to $1.1246. Sterling was last trading at $1.3155, up 0.21% on the day.

Signs of progress in U.S.-China trade talks and decent Chinese and U.S. factory activity data in recent days has boosted sentiment and help world recession fears to recede. On Friday, investors will look at the monthly payrolls report for a fresh economic catalyst. Generally strong world stocks and hopes of a softer Brexit sparked a sell-off in safe-haven government bonds.

Benchmark 10-year notes last fell 9/32 in price to yield 2.5116%, from 2.479% late on Tuesday. Oil prices initially rose, with Brent reaching as high as $69.96 a barrel, then turned lower after EIA data showed a surprise large build in U.S. crude inventories.

U.S. crude fell 0.61% to $62.20 per barrel and Brent was last at $68.92, down 0.65%. (Reporting by Chuck Mikolajczak in New York Editing by James Dalgleish)