GLOBAL MARKETS-Stocks climb on muted trade hopes

(Adds U.S. market open, changes dateline; previous LONDON)

* British PM May announces resignation, pound bounce fades

* Trump: 'Dangerous' Huawei could be in China trade deal

* Dollar off 2-year highs; oil retreats

* World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Herbert Lash

NEW YORK, May 24 (Reuters) - World equity markets rebounded on Friday from heavy selling the previous day after President Donald Trump said U.S. complaints against China's Huawei Technologies might be resolved within the framework of a Sino-U.S. trade deal.

But 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.

While Trump on Thursday said a trade deal could resolve U.S. complaints against Huawei, he also called the Chinese telecommunications giant "very dangerous," suggesting resolution of the trade spat and stand-off over Huawei is not near.

"Today's action is mostly based on sentiment because the overall market is trading at a full valuation," Rahul Shah, chief executive of Ideal Asset Management in New York, said of the equity market. It remains highly susceptible to headline risk, Shah said, though investors took in stride a Commerce Department report that said new orders for U.S.-made capital goods fell more than expected in April.

The report also showed orders were not as strong as previously thought in March and shipments were weak over the last two months, further evidence that manufacturing and the broader U.S. economy were slowing after a growth spurt in the first quarter driven by exports and a buildup of inventories.

The pan-European STOXX 600 index rose 0.50% and MSCI's gauge of stocks across the globe gained 0.37%.

On Wall Street, the Dow Jones Industrial Average rose 72.25 points, or 0.28%, to 25,562.72. The S&P 500 gained 4.92 points, or 0.17%, to 2,827.16 and the Nasdaq Composite added 23.54 points, or 0.31%, to 7,651.83.

The dollar edged away from two-year highs set on Thursday after the weak U.S. manufacturing activity data sparked worries that the trade conflict with China may hurt the world's largest economy and erode the currency's safe-haven status.

Against a basket of six major currencies, the dollar was down 0.22% at 97.641 and noticeably off a two-year high of 98.371 the previous session.

The euro rose 0.18% to $1.1200 while the Japanese yen strengthened 0.22% versus the greenback at 109.35.

U.S. Treasury yields rose after Thursday's sharp falls, with investors booking profits after a surge in government bond prices and ahead of a long U.S. holiday weekend.

Trump's remarks about Huawei and the trade dispute helped fuel the decline in bond prices.

Benchmark 10-year U.S. Treasury notes fell 7/32 in price to push yields up to 2.3220%.

U.S. markets will close on Monday for Memorial Day, a federal holiday.

British Prime Minister Theresa May's resignation briefly sent sterling fluctuating wildly. It popped up nearly half a percent against the dollar after the announcement but the gains were short-lived and it subsequently traded back at $1.2672 , and not far off the day's lows versus the euro.

On Thursday, the pound suffered its 14th consecutive day of losses against the euro, its longest losing streak on record.

Sterling was up 0.33% against the dollar at $1.2696.

Oil see-sawed after early gains and remained on track for its biggest weekly drop of the year, pressured by rising inventories and concern about slowing economic growth.

U.S. crude inventories rose to their highest since July 2017, suggesting ample supplies in the world's top consumer , with prices also hit by worries that the U.S.-China trade conflict is developing into a more entrenched dispute.

Brent crude, the global benchmark, rose 6 cents to $67.82 a barrel. U.S. West Texas Intermediate crude traded flat at $57.91.

(Reporting by Herbert Lash; additional reporting by Karin Strohecker, Dhara Ranasinghe, Tomo Uetake and Noah Sin; editing by John Stonestreet and Dan Grebler)