* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, Nov 25 (Reuters) - World shares staged a cautious rally on Monday as investors held out for some progress in U.S.-China trade talks, while the dollar dipped after its latest rally on the back of strong U.S. economic data.
The MSCI All-Country World Index, which tracks shares across 47 countries, was up 0.2% by midday in London.
European shares rose for the second straight session following reports that Washington and Beijing were nearing a trade agreement. The pan-European STOXX 600 index was up 0.7% at 1200 GMT, led by trade-sensitive mining firms.
Britain's FTSE100 index was up 0.85%, Germany's DAX rose 0.5%, and France's CAC40 index was up 0.4%.
A Chinese state-backed newspaper reported that China and the United States were "very close" to an initial trade agreement, adding to optimism from Friday, when the presidents of both countries reiterated their desire for a deal.
China said on Sunday it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights infringements.
"China being prepared to look at intellectual property is obviously the catalyst for a nice move higher, or a return to the highs earlier this month," said Michael Hewson, chief markets analyst at CMC Markets in London.
Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.7%, after losing 0.4% last week.
Japan's Nikkei firmed 0.7%, while Australian stocks rose 0.5% and Shanghai blue chips rose 0.3%.
E-Mini futures for the S&P 500 added 0.2%.
On Saturday, U.S. National Security Adviser Robert O'Brien said an initial trade agreement with China was still possible by the end of the year, though he said Washington would not turn a blind eye to what happens in Hong Kong.
The comments added to worries that a Chinese crackdown on anti-government protests in Hong Kong could complicate the talks.
"A 'phase one' deal is now priced into markets; there isn't much upside that will come from that unless they announce something like a complete rollback of the tariffs imposed, (but) that doesn't really seem likely," said Simona Gambarini, markets economist at Capital Economics.
In currency markets, the dollar was steady near a 10-day high against the euro hit after its rally on Friday when U.S. manufacturing surveys beat forecasts, just as European Union numbers disappointed.
Rising Germany business morale in November did not help the euro, which traded 0.1% lower at $1.1014. Munich-based Ifo's business climate index rose to 95.0 in November from 94.7 in October. The November reading was in line with a Reuters consensus forecast.
The index that measures the dollar against a basket of currencies was flat.
European Central Bank President Christine Lagarde on Friday called on euro zone governments to strengthen domestic demand.
Federal Reserve Chair Jerome Powell speaks later on Monday and is expected to underline the steady outlook for rates given the better economic figures.
Spot gold was 0.34% lower at $1,457.13 per ounce.
Oil prices held above the $63 per barrel mark.
Brent crude futures were flat at $63.37, while U.S. crude fell 0.1% to $57.72 a barrel. (Reporting by Ritvik Carvalho; additional reporting by Sagarika Jaisinghani and Lisa Pauline Mattackal in Bangalore and Wayne Cole in Sydney, Editing by Angus MacSwan)