* European equities rally on 750 bln euro recovery fund
* Wall Street gains on reopening business optimism
* Deteriorating U.S.-Sino rift lifts save-haven gold
* Oil slightly lower on inventory build
By Herbert Lash and John McCrank
NEW YORK, May 28 (Reuters) - Equity markets climbed on Thursday as more businesses returned to work and as a 750-billion-euro stimulus plan in Europe lifted regional stock indices and the euro, but gold rebounded on deteriorating U.S.-China relations.
Oil prices were flat to slightly lower as the market awaited confirmation of industry data that on Wednesday showed a surprise increase in U.S. crude stocks, which offset hopes for a demand recovery as coronavirus-linked lockdowns ease.
Gold jumped 1% on safe-haven demand as a U.S.-Sino rift deepened over further moves by Beijing to impose a national security law on Hong Kong. But equity and bond markets largely ignored the standoff.
China's parliament approved national security legislation for Hong Kong that democracy activists say could erode the territory's freedoms and jeopardise its role as a global financial hub. have largely turned a blind eye to renewed U.S.-China tensions and instead are focused on the reopening of business activity, said Candice Bangsund, a global asset allocation portfolio manager at Fiera Capital in Montreal.
"Stocks have maintained that positive momentum largely reflecting optimism that growth will recover as COVID lockdowns are eased and economies progressively reopen," Bangsund said.
"Enhanced government stimulus announcements this week out of Europe and Japan have emboldened that risk-on trade," she said.
In Europe, the pan-regional STOXX 600 index .STOXX rose 1.42% to a fresh 11-week high on the European Union's plan to prop up the bloc's coronavirus-hit economies with the 750 billion euro ($828 billion) recovery fund.
The euro EUR= rose 0.4% to $1.1047, a two-month high. The dollar index =USD fell 0.248%.
Stocks on Wall Street rose, though less than Europe.
The Dow Jones Industrial Average .DJI rose 59.41 points, or 0.23%, to 25,607.68. The S&P 500 .SPX gained 9.48 points, or 0.31%, to 3,045.61 and the Nasdaq Composite .IXIC added 33.00 points, or 0.35%, to 9,445.36.
Asian markets were subdued after U.S. Secretary of State Mike Pompeo warned Hong Kong no longer warranted special treatment under U.S. law. broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS ended flat. Shares in Hong Kong .HSI ended down 0.7% as Chinese shares managed to close in positive territory .SS , while Japan's Nikkei jumped 2.3%. .N .T
Euro zone bond yields were stable, with Italian borrowing costs - a key European confidence indicator - edging toward new eight-week lows. Safe-haven German bonds sold off slightly. government debt yields rose as stocks gained, reducing demand for safe-haven bonds, before the Treasury is due to sell a record $38 billion of seven-year notes.
Benchmark 10-year notes US10YT=RR rose 1.1 basis points to yield 0.6868%.
U.S. crude oil, gasoline and distillate stocks all rose, data from industry group the American Petroleum Institute showed on Wednesday, putting a damper on a recent rally.
U.S. crude CLc1 fell 0.98% to $32.49 per barrel and Brent LCOc1 was at $34.38, down 1.04%.
Saudi Arabia and some other OPEC oil producers are considering extending record high output cuts until the end of 2020 but have yet to win support from Russia, according to OPEC+ and Russian industry sources.