(Updates to U.S. markets close)
* Trump: 'Dangerous' Huawei could be in China trade deal
* Bond price decline likely short-lived on trade fears
* British PM May announces resignation, pound gains
* Dollar off 2-year highs; oil rebounds
* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh
By Herbert Lash
NEW YORK, May 24 (Reuters) - World equity markets rebounded on Friday from the previous day's sharp fall, after U.S. President Donald Trump said complaints against China's Huawei Technologies Co Ltd HWT.UL might be resolved within the framework of a Sino-U.S. trade deal.
Tensions remained high, with China accusing U.S. Secretary of State Mike Pompeo of fabricating rumors after he said Huawei's chief executive was lying about the telecom network gear maker's ties to the Chinese government. Thursday, Trump said a trade deal could resolve U.S. complaints against Huawei, but he also called the company "very dangerous."
"Today's action is mostly based on sentiment because the overall market is trading at a full valuation," Rahul Shah, CEO of Ideal Asset Management in New York, said of equities.
Investments remain highly susceptible to headline risk, Shah said, though investors took in stride a U.S. Commerce Department report that said new orders for domestic capital goods fell more than expected in April. report also showed March orders were not as strong as previously thought, and shipments were weak over the last two months, further evidence that manufacturing and the U.S. economy were slowing.
MSCI's gauge of stock performance across 47 countries .MIWD00000PUS gained 0.39%, while the pan-European STOXX 600 index .STOXX closed up 0.56%.
Investors appeared unfazed by British Prime Minister Theresa May's resignation as Conservative party leader after failing in a final attempt to win parliamentary support for her deal to exit the European Union. Wall Street, the Dow Jones Industrial Average .DJI rose 95.22 points, or 0.37%, to 25,585.69. The S&P 500 .SPX gained 3.82 points, or 0.14%, to 2,826.06 and the Nasdaq Composite .IXIC added 8.73 points, or 0.11%, to 7,637.01.
For the week, the Dow fell 0.68%, the S&P 500 slid 1.16% and the Nasdaq declined 2.29%.
The dollar edged off two-year highs set on Thursday, pressured as the weak U.S. manufacturing activity data sparked worries the trade conflict with China may hurt the world's largest economy.
Against a basket of six major currencies, the dollar .DXY was down 0.29% at 97.575, well off the two-year high of 98.371 the previous session.
The euro EUR= rose 0.24% to $1.1207 while the Japanese yen JPY= strengthened 0.27% versus the greenback at 109.29.
U.S. Treasury yields rose, as Trump's remarks about Huawei encouraged investors to book profits a day after a surge in government bond prices and ahead of a long U.S. holiday weekend.
Benchmark 10-year U.S. Treasury notes US10YT=RR fell 8/32 in price to push yields up to 2.3237%.
U.S. markets will close on Monday for Memorial Day, a federal holiday.
May's resignation briefly sent sterling fluctuating wildly, rising nearly half a percent against the dollar after the announcement and traded near those gains at $1.2714 GBP= . Against the euro, sterling snapped a 14-day losing streak. EURGBP=
Oil prices climbed 1% but still posted their biggest weekly drop of the year, pressured by rising inventories and worries about the global economy. O/R
U.S. crude inventories rose to their highest since July 2017, suggesting ample supplies in the world's top consumer EIA/S . Brent crude LCOc1 , the global benchmark, rose 93 cents to settle at $68.69 a barrel. For the week, it fell almost 5%.
U.S. West Texas Intermediate crude CLc1 traded up 72 cents to settle at $58.63. For the week WTI fell 6.5%.
Gold steadied, under pressure from the equities rebound but supported by a weaker dollar and growing expectations for a U.S. interest rate cut.
U.S. gold futures for June GCcv1 settled down 0.1% at $1,283.60 an ounce.
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https://tmsnrt.rs/2YLviNL
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