GLOBAL MARKETS-Stocks rally on renewed trade talk optimism, yields rise

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

* European stocks jump more than 1% after Trump remarks

* U.S.-China trade deal still possible-Bloomberg report

* U.S. stocks snap three-day losing streak

* Oil prices jump ahead of OPEC production talks

* Dollar slumps on weak U.S. data

By Herbert Lash

NEW YORK, Dec 4 (Reuters) - Government debt yields and a gauge of global equity markets rose on Wednesday as sentiment improved after U.S. President Donald Trump said trade talks with China were going "very well" and a news report suggested key differences were being ironed out.

European stocks rallied, with the blue-chip Euro STOXX 50 , Germany's DAX and French CAC 40 gaining more than 1%. The news reversed overnight losses in Asia when investors remained jittery over the prolonged talks.

The dollar slumped against the euro after the Institute for Supply Management (ISM) reported activity in the U.S. services sector slowed more than expected in November amid lingering concerns about trade tensions and worker shortages.

The poor ISM reading failed to derail the rally in equities as the underlying economic data overall is getting better, said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.

"It's looking more and more like two things: One, we've certainly pushed back heavy fears of recession this year and the next thing is the realization that we might be accelerating again, not only here but globally," Paulsen said.

Trump, who on Tuesday had roiled markets after he raised the prospect of extended U.S.-Sino trade tensions, told reporters at a meeting of NATO leaders near London that "discussions are going very well and we'll see what happens."

Market sentiment rebounded earlier when Bloomberg reported that the two sides were closer to agreeing on how many tariffs would be rolled back in a "phase one" trade deal.

MSCI's gauge of equity performance in 49 countries gained 0.55% while stocks on Wall Street also rose, snapping a three-day losing streak.

The Dow Jones Industrial Average rose 186.7 points, or 0.68%, to 27,689.51. The S&P 500 gained 23.18 points, or 0.75%, to 3,116.38 and the Nasdaq Composite added 54.39 points, or 0.64%, to 8,575.03.

Investors also shrugged off a survey showing U.S. private-sector job growth unexpectedly slowed to its weakest pace in six months in November as goods producers and construction firms cut jobs.

Paulsen said the ADP National Employment Report is not that closely correlated with the payrolls data compiled by the U.S. Labor Department, which will release its November report on Friday. A slowdown in jobs creation in a tight labor market is understandable, he also said.

Yields on benchmark U.S. and euro zone government debt rebounded, with the 10-year U.S. Treasury note falling 19/32 in price to push its yield up to 1.7723%.

The 10-year German bund' s yield rose 1 basis point to -0.337% and yields across the euro area followed suit, rising by 1 to 2 basis points.

The dollar index fell 0.15%, with the euro up 0.05% to $1.1087.

The Japanese yen weakened 0.17% versus the greenback to 108.85 per dollar.

Oil prices jumped ahead of an expected extension to production curbs by the Organization of the Petroleum Exporting Countries and its allies. More support came from industry data showing a larger-than-forecast drop in U.S. crude stockpiles.

U.S. crude rose 3.9% to $58.29 a barrel. Brent crude futures rose $2.11 to $62.93 a barrel. (Reporting by Herbert Lash; Editing by Andrea Ricci)