NEW YORK (Reuters) - Stocks gained on Wednesday on a report that China could yet agree to a partial trade deal with the United States despite recent tensions, while the prospect of a last-minute Brexit agreement between the European Union and Britain seemed as remote as ever.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., October 9, 2019. REUTERS/Brendan McDermid

Sterling was little changed against the dollar after losing nearly 1% over the past two sessions.

China is still open to agreeing to a partial trade deal, Bloomberg reported on Wednesday, despite the recent U.S. blacklisting of Chinese technology firms and reports on visa restrictions from both sides.

“You don’t want to ignore headlines, but at the same time each headline seems to say the same thing - that both sides want to see something happen and both sides are encouraged that something may happen,” said Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston.

Markets have churned this month on mounting evidence that the U.S.-China trade war is damaging the global economy. Stocks have been particularly sensitive to headlines regarding trade.

“A partial deal with China would at least pave the way for a larger deal down the road,” said Tim Ghriskey, chief investment strategist at Inverness Counsel in New York. “Every day we get a different tweet and the market takes a different direction. Today is an up day on a favorable tweet.”

Graphic: Global assets in 2019 - tmsnrt.rs/2jvdmXl

Graphic: Global currencies vs. dollar - tmsnrt.rs/2egbfVh

Graphic: Emerging markets in 2019 - tmsnrt.rs/2ihRugV

Stocks pared gains sharply toward the session close after Reuters reported Beijing has lowered expectations for significant progress from this week’s trade talks. But Wall Street still ended higher.

The Dow Jones Industrial Average .DJI rose 181.97 points, or 0.7%, to 26,346.01, the S&P 500 .SPX gained 26.34 points, or 0.91%, to 2,919.4 and the Nasdaq Composite .IXIC added 79.96 points, or 1.02%, to 7,903.74.

The pan-European STOXX 600 index .STOXX rose 0.42% and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 0.55%.

Emerging market stocks lost 0.09%, while Nikkei futures NKc1 rose 1.2%.

BREXIT TALKS

Talks between the European Union and Britain over a deal for London’s departure from the EU on Oct. 31 appeared to be going nowhere.

British lawmakers have voted to force Prime Minister Boris Johnson to seek an extension to the departure date if he cannot agree a deal, but investors are worried about prospects for prolonged uncertainty.

Sterling GBP= was recently at $1.2207, down 0.08% on the day after falling 0.93% over the two previous sessions.

The dollar index .DXY fell 0.01%, with the euro EUR= up 0.16% to $1.0971.

The Japanese yen weakened 0.35% versus the greenback at 107.48 per dollar.

The Turkish lira touched a near four-month low versus the dollar after Ankara launched a military operation against Kurdish fighters in northeast Syria, days after U.S. troops pulled back.

The Turkish currency lost 0.53% versus the dollar at 5.86.

In bond markets, U.S. Treasury yields US10YT=RR rose as investors happy to take on more risk sold out of safer assets. A flood of supply also weighed on U.S. bond prices.

Benchmark 10-year notes US10YT=RR last fell 13/32 in price to yield 1.5819%, from 1.539% late on Tuesday.

Ecuadorian bonds tumbled as protesters began a national strike after President Lenin Moreno refused to step down or overturn anti-austerity measures that have triggered the worst unrest in a decade.

Oil prices were narrowly mixed as Turkey’s attack and trade hopes were offset by a build in U.S. crude inventories.

Brent crude LCOc1 settled at $58.32 a barrel, up 8 cents. U.S. West Texas Intermediate crude CLc1 settled at $52.59 a barrel, down 4 cents. Both benchmarks rose slightly after settlement.

Spot gold XAU= % to $1,505.65 an ounce. U.S. gold futures GCc1 gained 0.65% to $1,511.20 an ounce.