* Trump says trade talks underway with China, could act on Huawei
* Asia, Europe stocks push higher, Wall Street rises
* Pound rises off 20-mth low as British PM faces party challenge
* U.S. CPI in line with expectations
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Sinéad Carew
NEW YORK, Dec 12 (Reuters) - Stock markets around the world rose along with U.S. Treasury yields on Wednesday as U.S. President Donald Trump sounded upbeat about a China trade deal and sterling bounced on bets that UK Prime Minister Theresa May would keep her job.
U.S. Treasury yields advanced in tandem with Wall Street's gains after Trump said trade talks with China are progressing with discussions underway by telephone and more meetings likely among officials of both countries. an interview with Reuters on Tuesday, Trump also said he would intervene in the Justice Department's case against a top executive at China's Huawei Technologies HWT.UL if it served national security interests or helped to close a trade deal. after a spate of dizzying volatility in the past few days, there was some wariness about whether gains would hold.
"There maybe some near-term optimism because of the trade headlines but we'll see where it goes," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida. "We have seen a lot of intraday movement lately and we might see the same today and that's a sign the market is looking at what the appropriate level should be."
The Dow Jones Industrial Average .DJI rose 348.46 points, or 1.43 percent, to 24,718.7, the S&P 500 .SPX gained 39.98 points, or 1.52 percent, to 2,676.76 and the Nasdaq Composite .IXIC added 144.51 points, or 2.06 percent, to 7,176.34.
The pan-European STOXX 600 index .STOXX rose 1.88 percent and MSCI's gauge of stocks across the globe .MIWD00000PUS gained 1.76 percent.
The British pound sterling jumped off 20-month lows as May vowed to fight a challenge to her leadership saying a change could jeopardize Britain's divorce from the European Union. currency had tumbled on concerns about vote of no confidence in the prime minister but traders bet she would survive after a number of colleagues backed her, isolating rivals who want a clean, sudden break from the EU. GBP= was last trading at $1.2651, up 1.34 percent on the day.
The dollar index .DXY fell 0.4 percent, with the euro EUR= up 0.42 percent to $1.1362.
The euro was helped by a report Italy would scale down its budget deficit target to between 2.0-2.2 percent of gross domestic product, below the previous target of 2.4 percent. INFLATION UNCHANGED
Investors were also digesting U.S consumer price data that showed unchanged headline inflation, causing U.S. Treasuries to initially pare gains. benchmark 10-year notes US10YT=RR fell 5/32 in price to yield 2.8987 percent, from 2.881 percent late on Tuesday. markets still expect the Fed to tighten at its policy meeting next week, Trump said in a Reuters interview on Tuesday that the central bank would be "foolish" to do so. crude CLcv1 rose 1.24 percent to $52.29 per barrel as oil was supported by a drop in U.S. crude inventories, a cut in Libyan exports and an OPEC-led deal to trim output. O/R gold XAU= added 0.3 percent to $1,246.65 an ounce. Nikkei .N225 had led Asia with a jump of 2.15 percent, and while Shanghai .CSI300 rose 0.34 percent.