* China agriculture delegation scraps U.S. farm visit to Montana
* MSCI world equity index slips
* Central bank easing helps risk sentiment but trade tensions hurt
* Treasury yields fall; dollar slips vs yen
* Oil prices edge higher (Updates to U.S. afternoon trading)
By Saqib Iqbal Ahmed
NEW YORK, Sept 20 (Reuters) - An index of global stock markets gave up early gains after Chinese agriculture officials who were to visit U.S. farm states next week canceled their trip, dampening optimism on U.S.-China trade talks.
Revived worries about the state of the ongoing trade tensions between Washington and Beijing drove Treasury yields lower and pushed the U.S. dollar down against the safe-haven Japanese yen.
Stocks had started the day stronger as stimulus measures by major central banks eased worries about growth. But optimism faded following the report that the Chinese officials canceled their visit.
The cancellation came as U.S.-Chinese trade talks were held in Washington and U.S. President Donald Trump said he wanted a complete trade deal with the Asian nation, not just an agreement for China to buy more U.S. agricultural goods.
The MSCI world equity index, which tracks shares in 47 countries, was 0.07% lower.
On Wall Street, stocks, which had started the day strong following China cutting a key lending rate for the second straight month, reversed course on the news of the canceled farm visits.
Equity markets have largely welcomed the central bank moves in recent days, including interest rates cuts by the European Central Bank and the U.S. Federal Reserve.
“It’s trade-related and markets are just hyper-sensitive to trade,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
For the week, the S&P 500 and the Nasdaq were set to end slightly lower, their first weekly loss in four weeks.
The Dow Jones Industrial Average fell 50.81 points, or 0.19%, to 27,043.98, the S&P 500 lost 5.33 points, or 0.18%, to 3,001.46 and the Nasdaq Composite dropped 44.04 points, or 0.54%, to 8,138.84.
The pan-European STOXX 600 index finished up 0.29%, after giving up some of the gains logged earlier in the session.
Increased concerns that the United States and China are unlikely to forge a trade deal in the near term drove U.S. Treasury yields lower.
Benchmark 10-year notes gained 5/32 in price to yield 1.7579%, down from 1.774% on Thursday.
Bonds were also supported after the New York Federal Reserve said it plans to pour cash into the U.S. banking system through early October to avert another market disruption, after the cost of loans in the overnight repurchase agreement (repo) market soared to 10% on Tuesday.
In foreign exchange markets, the dollar fell sharply against the yen as investors weighed the latest developments on the U.S.-China trade front.
The yen tends to attract demand in times of market stress as the currency is backed by Japan’s current account surplus, which offers it more resilience than currencies of deficit-running countries.
The dollar was 0.27% lower against the Japanese currency. Against a basket of major currencies, the greenback was up 0.24%.
Oil prices edged higher, with Brent set for its biggest weekly gain since January, lifted by rising Middle East tensions and supply concerns after an attack on Saudi Arabia’s energy industry last weekend.
“The question is, ‘Can they convince the market that they can keep their oil fields safe?’” said Phil Flynn, an analyst at Price Futures Group in Chicago, in a note.
At 1826 GMT, U.S. crude fell 0.07% to $58.09 per barrel and Brent was last at $64.41, up 0.02% on the day.
Lingering tensions in the Middle East along with increased worries about the trade tensions supported gold, and the yellow metal was on pace for its first weekly rise in four. Spot gold was up 0.81% at $1,511.21 an ounce.
Reporting by Saqib Iqbal Ahmed; Additional reporting by Ambar Warrick and Medha Singh in Bengaluru, Julia Payne in London, Florence Tan in Singapore