* European stocks struggle to gain ground after loosing streak
* Germany's DAX falls 0.3%, FTSE slips 0.1%
* U.S. futures point to stronger open, following Asia lead
* Fed chairman's remarks revive some bets on aggressive rate cut
* Dollar sags after Powell's comments
* Oil hits six-week highs a Gulf of Mexico faces storm
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
By Karin Strohecker
LONDON, July 11 (Reuters) - Europe's early stocks rally faded and global bond yields rose after jitters over corporate earnings and trade doused an early rally fuelled by enthusiasm over Federal Reserve Chairman Jerome Powell cementing rate cut expectations.
The pan-European STOXX 600 .STOXX struggled to cling onto 0.1% gains after losing 1.4% over the past four sessions with Germany's DAX .GDAXI and Britain's FTSE .FTSE down 0.1% while France's CAC .FCHI hovered just in positive territory.
The automotive sector felt much of the pressure with large-cap car parts suppliers Valeo VLOF.PA and Continental CONG.DE tumbling more than 2% following a slew of warnings by small-cap auto and industrial suppliers < AAGG.DE> SENSI.S .
European markets had rallied initially after Powell, in his first day of testimony before Congress on Wednesday, confirmed the U.S. economy was still under threat from disappointing factory activity, tame inflation and a simmering trade war, and said the Fed stood ready to "act as appropriate". worries about corporate health as the earnings season kicks off and the possible opening of a new front in the trade row between Washington and the European Union saw gains quickly evaporate.
France's Senate gave final approval to a tax on big technology companies - many of which are U.S. firms. President Donald Trump on ordered an investigation into the tax, a step that could lead to the United States imposing new tariffs or other trade restrictions.
"We have a U.S. president who has declared his policy is to be unpredictable, so the overriding feeling is trade war continues to be a very strong feature of the Trump presidency ... what happens next depends on the next tweet," said Marie Owens Thomsen at Indosuez Wealth Management.
Yet the gloom seemed confined to Europe for now. U.S. futures pointed to a stronger opening for Wall Street as well with E-Minis for the S&P500 ESc1 at 0.2%. Asia had also chalked up healthy gains, with MSCI's broadest index of Asia-Pacific shares ex-Japan .MIAPJ0000PUS up 0.8% while Japan's Nikkei .N225 added 0.5%.
U.S. stocks ended higher on Wednesday and the S&P 500 .SPX briefly crossed 3,000 points for the first time following Powell's remarks. .N
Nonetheless, many questioned how much momentum the prospect of lower interest rates could provide.
"We are in the camp and have been all year, and arguably wrongly, that the Fed becoming more dovish and cutting rates is not good for risk assets," said Neil Dwane, global strategist and portfolio manager at Allianz (DE: ALVG ) Global Investors. Nine of 12 Fed rate cutting cycles had not stopped a recession, he noted.
"Given we are in the longest expansion and have only had rates lifted to 2.5%, for me it begs the question, is a soft landing possible?"
A strong June U.S. jobs report earlier this month had heightened expectations the Fed was more likely to cut by 25 basis points than by 50, though Powell's cautious stance helped fuel bets on heftier easing.
According to CME Group's FedWatch tool, the chance of a 50 basis point cut rose to around 1 in 4 currently from near-zero ahead of Tuesday for the Fed's next policy meeting on July 30-31.
However, minutes from the Fed's last meeting, in mid-June, showed some policymakers felt there was not yet a strong case for easing. rate cut prospects also weighed on the dollar. The dollar index .DXY against a basket of six major currencies slipped 0.24% to 96.876, extending losses for a second straight session after reaching a three-week peak on Tuesday.
The dollar was down 0.4% at 108.06 yen JPY= , forced off a six-week high of 108.990 the previous day. It was still some distance from a six-month trough of 106.780 set on June 25. The euro EUR= nudged up 0.3% to $1.1283.
In fixed-income markets, the 10-year U.S. Treasury yield US10YT=RR rose to 2.07%, though still stood below Wednesday's three-week high of 2.113%.
In commodities, U.S. crude oil futures CLc1 climbed to a six-week high as oil rigs in the Gulf of Mexico were evacuated before a storm, while an incident with a British tanker in the Middle East highlighted ongoing tensions in the region. O/R
U.S. crude oil futures gained 24 cents to trade at $60.67 per barrel. Brent crude LCOc1 futures rose 30 cents to $67.31.
Spot gold XAU= briefly touched $1,426 an ounce, its highest since July 3, on the reinforced expectations for a Fed rate cut. GOL/
(Reporting Karin Strohecker; additional reporting by Sujata Rao and Marc Jones in London, Shinichi Saoshiro in Tokyo; editing by Larry King)
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