World stocks slipped on Monday, halting a four-day recovery rally as anxiety surrounding global trade conditions and rising U.S. interest rates dampened risk appetite.

European shares managed to reverse losses in choppy trade as investors readied for U.S. congressional midterm elections on Tuesday, while sterling briefly climbed on a newspaper report that a Brexit agreement was imminent.

U.S. stock futures also crept into positive territory, indicating a stronger start for Wall Street with S&P 500 futures up 0.1 percent and Nasdaq futures up 0.2 percent.

"Everyone's on hold until the (end-November) G20 and also the Fed coming up," said Arbuthnot Latham's Perdon. "Our sense is absolutely that there's a lot of cash on the sidelines right now."

Chinese blue-chips fell overnight after White House economic adviser Larry Kudlow denied Washington has drafted a trade agreement with Beijing.

But investors looked to signs of support from Chinese stimulus to withstand higher trade tariffs. President Xi Jinping promised to lower import tariffs and continue to broaden market access.

"The market hasn't been paying as close attention as they might normally because they've been a bit distracted by the specter of a trade war. But the policy response out of China has been massive," said Gregory Perdon, co-chief investment officer at Arbuthnot Latham.

With the Federal Reserve meeting on Wednesday and Thursday, the prospect of even tighter U.S. monetary policy after strong economic data is also on investors' minds.

Markets are now pricing in a higher probability of a December rate hike with further tightening to 2.75-3.00 percent seen through 2019.

Tighter monetary policy, a stronger dollar, and trade tariffs have created what Citi strategists call "Trump's triple tightening" this year.

"This ...has slowed growth and raised risks around the world," they wrote.

Investors were also cautious ahead of the U.S. midterm elections.

Opinion polls show a strong chance the Democratic Party could win control of the House of Representatives after two years of wielding no practical political power in Washington, with Trump's Republican Party likely to hold the Senate.

"What's spooking the market is not Congress or Senate — what's spooking the market is the volatility of Trump," said Perdon. "I'm not convinced if there's a change of control that would be able to temper that."