* MSCI global stock index rebounds after Monday slide
* Trump tweets optimism on China trade, lines up new tariffs
* Italian concerns weigh down euro
* Oil prices jump on drone attack on Saudi Aramco facilities
By Lewis Krauskopf
NEW YORK, May 14 (Reuters) - Global stocks rebounded on Tuesday from two-month lows as investors took heart from comments of U.S. and Chinese officials a day after a spike in tensions between the world's two largest economies rattled financial markets.
Fears that the United States and China were spiraling into a fiercer, more protracted trade dispute that could derail the global economy have shaken investors in the past week. On Monday, MSCI's gauge of stocks across the globe .MIWD00000PUS posted its biggest one-day decline in over five months.
On Tuesday, the MSCI index gained 0.42%.
U.S. President Donald Trump sounded optimistic about prospects for a trade deal even as his administration readied 25% tariffs on all remaining Chinese imports, while the Chinese government said the two sides had agreed to keep talking. This followed Washington's decision last week to hike its levies on $200 billion of Chinese imports to 25% from 10%. likely that it will take markets a day or two to adjust to this increased rhetoric around trade, because markets up until a week ago thought that trade had been put to bed,” said Carol Schleif, deputy chief investment officer with Abbot Downing in Minneapolis.
The Dow Jones Industrial Average .DJI rose 196.33 points, or 0.78%, to 25,521.32, the S&P 500 .SPX gained 23 points, or 0.82%, to 2,834.87 and the Nasdaq Composite .IXIC added 69.29 points, or 0.91%, to 7,716.31.
The benchmark S&P 500 recorded its biggest one-day loss since Jan 3 on Monday, after China struck back in the trade dispute by saying it would impose higher tariffs on a range of U.S. goods. Tuesday, the pan-European STOXX 600 index .STOXX rose 0.73%.
"There is a bit of a rebound, however it needs to be seen if it will last or not," said Markus Huber, trader at City of London Markets.
In another sign trade tensions are hurting the economic outlook, Germany's ZEW institute said investors' mood had deteriorated unexpectedly in May. dollar index .DXY , which measures the greenback against a basket of currencies, rose 0.17%, with the euro EUR= down 0.12% to $1.1209.
The euro slid after Italy's deputy prime minister said the country was ready to break European Union budget rules if necessary to spur employment. Italian government bond yields rose sharply. Treasury yields were little changed. Benchmark 10-year notes US10YT=RR last fell 3/32 in price to yield 2.4139%, from 2.405% late on Monday.
Oil prices rose after top exporter Saudi Arabia said explosives-laden drones launched by a Yemeni armed movement aligned to Iran had attacked facilities belonging to state oil company Aramco. crude CLcv1 rose 1% to $61.65 per barrel and Brent LCOcv1 was last at $70.92, up 0.98% on the day.
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