LONDON, Feb 4 (Reuters) - Stocks and currencies held steady on Tuesday as an uneasy calm settled on markets despite the United States and China going tit-for-tat on tariffs, a day after Mexico and Canada won a last-minute reprieve.
The U.S. S&P 500 (.SPX), opened flat, while the tech-heavy Nasdaq (.NDX), climbed 0.2%.
The S&P dropped 1.9% early on Monday as U.S. President Donald Trump looked set to put 25% tariffs on Mexican and Canadian goods, only to rally and finish 0.76% lower when both countries won a delay by promising to beef up border security.
European stocks (.STOXX), were last flat after falling 0.87% the previous day.
"We're taking some comfort from the fact that we sort of stepped back from the brink of a global trade war yesterday," said Ben Laidler, head of equity strategy at Bradesco BBI.
"I think the lack of a stronger rebound is that we're not out of the woods yet. We've got 10% being put on China, I think the European Union has been put clearly in the crosshairs."
An additional 10% U.S. tariff on Chinese exports took effect at 0501 GMT, and minutes later Beijing announced it was investigating Google and imposing tariffs on imports of U.S. oil, coal, gas, cars and farm equipment from Feb. 10.
The dollar index , which tracks the currency against six major peers, was last 0.18% lower at 108.38, after jumping as high as 109.88 on Monday.
The U.S. currency fell 0.17% against China's offshore yuan as investors took heart that a negotiation with China may be possible.
"Investors will remain hopeful that both sides will reach an agreement before long and remove the barriers," said Ben Bennett, Asia-Pacific investment strategist at Legal & General Investment Management in Hong Kong.
Hong Kong's Hang Seng (.HSI), rallied 2.8% overnight, hitting its highest level since December.
Mainland Chinese markets remained shut for the Lunar New Year break, with investors focusing on where China fixes the currency trading band on Wednesday morning for clues as to whether it will seek to weaken the yuan to limit the impact of tariffs.
Trump's press secretary said the president plans to speak with Chinese President Xi Jinping in the next few days.
Investor discomfort had safe-haven gold trading near record highs at $2,838 an ounce.
Bonds fell slightly after ticking higher on Monday, with benchmark 10-year Treasury yields up 3 bps to 4.569% .
The euro was steady at $1.0341 while the dollar rose 0.21% to 155.08 yen .
Traders were also focused on company earnings, with Google (GOOGL.O), reporting after U.S. markets close on Tuesday.
Crude oil prices fell sharply, with Brent crude down 2.4% to $74.16, the lowest level this year.
Reporting by Harry Robertson; additional reporting by Tom Westbrook and Ankur Banerjee in Singapore; Editing by Ros Russell