* European markets, MSCI world index battle to avoid weekly fall
* Kudlow says U.S., China getting close to trade deal
* Yen weakens, U.S. Treasury, European government yields higher
* Hong Kong, Chile markets battered by protests
* World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Mixed week for commodities
By Marc Jones
LONDON, Nov 15 (Reuters) - Hopes of a U.S.-China trade deal turned world stock markets and other risk assets higher on Friday, though an escalating wave of global protests from Hong Kong to Chile left some deep scars.
Europe's main bourses and Wall Street futures followed Asia higher after White House economic adviser Larry Kudlow said on Thursday that the United States and China were nearing a deal and talking every day.
"We're getting close," he told an event at the Council on Foreign Relations in Washington. "The mood music is pretty good, and that has not always been so in these things."
It kept alive hopes that MSCI's 49-country world index and Europe's STOXX 600 could both avoid their first weekly falls since the start of October, but it was touch and go and others had little chance.
Emerging market stocks were down 1.7% for the week, after a violent escalation of pro-democracy demonstrations in Hong Kong had left the Hang Seng down 4.7%, its worst weekly performance in four months.
Chinese blue-chip shares ended the day down 0.75% and 2.4% for the week, which was their biggest fall since August. Fierce anti-government protests in Chile means its currency could have its worst week since 2011 with a 7% plunge .
"The politics of anger is an important element that one needs to take account off," UBP's EM macro and FX strategist Koon Chow said. "Populations are feeling left behind even during the upswing. You have to wonder what happens when people start losing their jobs."
Shane Oliver, chief economist at AMP Capital in Sydney, likened regional markets' bullish reaction to positive trade news to being in a relationship with an alcoholic, driven by entrenched hopes for recovery.
U.S. Commerce Secretary Wilbur Ross said there would be a call between U.S. and Chinese officials later in the day as both sides continue to hammer out a phase one trade pact, but added U.S. tariffs on Chinese imports could still start Dec. 15.
"Markets want to believe that there will be some sort of resolution to this issue, some sort of lasting truce at least, even though the experience of the last 18 months doesn't give a lot of cause for comfort," AMP's Oliver said.
However, weaker Chinese and U.S. economies as well as the U.S. presidential election next year put pressure on both sides to come to an agreement, he added.
In currencies, the safe-haven yen weakened, with the dollar rising 0.3% to buy 108.73 yen. The euro was barely changed at $1.1023 and the dollar index, which tracks the greenback against a basket of six major rivals, was off just 0.02% at 98.129.
Higher U.S. Treasury yields also illustrated the risk-on tone in the Asian session, with the 10-year yield rising to 1.845% from a U.S. close of 1.815% on Thursday.
The policy-sensitive two-year yield rose to 1.6101% from 1.593% on Thursday after U.S. Federal Reserve Chair Jerome Powell said the risk of the U.S. economy facing a dramatic bust is remote.
A Reuters poll of more than 100 economists showed that while concerns have eased over a U.S. recession, few see an economic rebound, and most believe a trade truce is unlikely in the coming year.
BULLS VS CHINA
Government borrowing costs in Germany and France also inched up on Friday, but were set for sizeable weekly declines, in contrast to southern European countries that have come under heavy selling pressure again this week.
Germany's 10-year Bund yield was at -0.33%, off more than one-week lows hit on Thursday. But it is down 8 bps on the week, set for the biggest weekly fall since mid-August. Dutch 10-year bond yields are down 7 bps this week, and French yields are 5 bps lower,.
Data on Thursday had showed Germany's economy grew just 0.1% in the third quarter, with consumer spending helping the country to avoid a mild contraction and a technical recession of two quarters of economic shrinkage.
"In general, there has been risk aversion in recent days and a shift to core bond markets from the periphery," said Daniel Lenz, a rates strategist at DZ Bank.
Global sentiment has been buffeted in recent weeks by conflicting assessments of progress in talks between the United States and China aimed at ending their 16-month-long trade war.
China's commerce ministry said the two countries are holding "in-depth" discussions on the first-phase trade pact, and that cancelling tariffs is an important condition to reaching a deal.
China has also ended a nearly five-year ban on imports of U.S. poultry meat, which the U.S. Trade Representative said would lead to more than $1 billion in annual shipments to China.
Those developments followed comments from officials from both countries last week that they had a deal to roll back tariffs, only to have U.S. President Donald Trump deny that any such deal had been agreed to.
The new record for the S&P, which gained just 0.08% to 3,096.63, came despite a grim outlook from network gear maker Cisco Systems that underlined the impact of trade uncertainty.
In commodity markets, U.S. crude prices seesawed after sliding Thursday on rising U.S. crude inventories. U.S. West Texas Intermediate crude stumbled from $57.02 to $56.67 a barrel.
Global benchmark Brent crude slipped 0.5% to just below $62 per barrel on the way to a modest weekly fall.
Gold retreated from gains that had been prompted by trade uncertainty. Spot gold was last trading at $1,463.90 per ounce, down 0.48%. ($1 = 6.9941 Chinese yuan)
(Additional reporting by Andrew Galbraith in Shanghai and Dhara Ranasinghe in London Editing by Mark Heinrich)