By Marc Jones

LONDON, May 8 (Reuters) - World shares inched higher on Thursday buoyed by U.S. President Donald Trump’s promise of a first trade deal in his global tariff war – tipped to be Britain - while the dollar gained as markets pushed out the chance of near-term Fed rate cuts.

Traders were also limbering up for an expected Bank of England quarter-point rate cut later in the day. Sweden and Norway had already left their rates steady, but both hinted at future cuts given all the global uncertainty.

Europe's main stock markets opened higher, led by a 1% rise from Germany's export-heavy DAX .GDAXI and a 0.3% gain for London's FTSE .FTSE, plus a similar lift for sterling against the euro GBPEUR=, on the trade deal signals.

U.S. President Donald Trump had posted on social media that he would hold an Oval Office press conference later on a "major trade deal with representatives of a big, and highly respected, country," using all capitalized letters.

Wall Street futures ESc1 were up nearly 1% too, but economists are eager to see the deal's details later and whether the baseline 10% tariff Trump has slapped on all countries up until now can be negotiated away.

Investors are also anxiously awaiting planned talks between U.S. and Chinese officials in Switzerland on Saturday, which could mark the first step in dialling down the damaging trade war between the world's top two economies.

Markets were still digesting the Federal Reserve's decision to leave U.S. interest rates in the 4.25%-4.5% range for a third straight meeting and its warning that the stagflationary risks of higher inflation and higher unemployment had risen.

Chair Jerome Powell said the Fed was still in "a good place" in terms of its policy, given that it wasn't clear if the U.S. economy will continue its steady growth, or wilt under mounting uncertainty and a possible spike in inflation.

"It's not at all clear what the appropriate response for monetary policy is at this time," Powell said, prompting markets to scale back the chance of a June rate cut to just 20%, from 30% a day earlier, while a move in July is now priced at 70%, compared with a near-certainty just a week ago.

"The addition of the phrase 'the FOMC….judges that the risks of higher unemployment and higher inflation have risen' says it all," Fitch Ratings Chief Economist Brian Coulton said. "The tariff shock will reduce real GDP growth and raise prices at the same time."

UNCERTAINTY

In the bond markets, 10-year US10YT=RR U.S. Treasury yields edged up 2 bps at 4.29%, while Germany's 10-year yield DE10YT=RR - the euro area's benchmark - also rose fractionally to 2.48%. GVD/EUR

The Fed's wait-and-see message also gave the dollar index a lift. After a brief wobble in Asia, it regained traction to sit .DXY 0.5% higher in Europe at just above the psychological 100 points threshold. /FRX

Trade deal hopes also saw Britain's pound GBP=D3 climb as much as 0.5%, although it eased back slightly to $1.3315 as the focus turned to the Bank of England's widely expected quarter-point rate cut later.

Its Governor Andrew Bailey and his BoE colleagues have long stressed the need for a gradual and careful approach to lowering borrowing costs. But analysts think that could be about to change.

PGIM's Guillermo Felices said his firm expects three more rate cuts after this one as the BoE's rate setters begin to put more focus on the spillovers from the global trade war.

"The front end rates market is almost in line with our view," he added, pointing to pricing of the next cut coming in July plus two more before the end of the year.

TECH TALK

Overnight in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS had ended down 0.3% while Japan's Nikkei .N225 gained 0.4% and Chinese blue chips .CSI300 rose 0.5% as they continued to recover ground lost since Trump's "Liberation Day" tariffs last month.

Wall Street had seen a late rally too after reports that the Trump administration was planning to rescind and modify a Joe Biden-era rule that curbed the export of sophisticated artificial-intelligence chips.

Nvidia shares NVDA.O jumped 3% although Google's parent firm Alphabet GOOGL.O suffered a 7.2% tumble on reports that Apple AAPL.O is readying a new artificial-intelligence enhanced web browser.

In commodities markets, the brighter trade deal sentiment lifted oil prices after they had fallen more than $1 on Wednesday. U.S. crude CLc1 futures rose 0.7% to $58.50 a barrel while Brent LCOc1 was at $61.50 per barrel, up 0.6% on the day.O/R

In precious metals, gold prices =XAU rose 0.3% to $3,374.5 an ounce amid the uncertainties about Fed policy outlook, but still short of its record high of $3,500.

($1 = 0.7527 pounds)

(Additional reporting by Stella Qiu in Sydney, Editing by William Maclean)

((marc.jones@thomsonreuters.com; +44 (0)20 7513 4042; Reuters Messaging: marc.jones.thomsonreuters.com@reuters.net X/Twitter @marcjonesrtrs))