LONDON/SYDNEY, May 29 (Reuters) - An initial market rally following a court ruling that blocked U.S. President Donald Trump's so-called "Liberation Day" tariffs lost steam on Thursday and the dollar fell against safe-haven currencies as markets assessed the uncertainty ahead.
The Manhattan-based Court of International Trade ruled that Trump overstepped his authority by imposing his April 2 across-the-board duties on imports from U.S. trading partners.
The White House appealed the decision, and could take it all the way to the Supreme Court if needed. But in the meantime, it offered some hope that Trump might back away from the highest tariff levels he had threatened.
The ruling could also encourage U.S. trading partners to pause any trade negotiations they are having with the White House while they wait to see how the case is resolved.
Analysts at Goldman Sachs noted that the court order does not block sectoral levies, and that there were other legal avenues for Trump to impose across-the-board and country-specific tariffs.
After rising initially on Thursday, stock markets pared their gains as investors digested the news along with data showing U.S. weekly jobless claims rising more than expected.
Europe's STOXX 600 index (.STOXX), was up 0.1%, having risen 0.5% earlier.
U.S. markets looked primed for a stronger reaction, with S&P 500 futures up 0.8%, after gaining as much as 1.8% earlier on Thursday.
Nasdaq futures were last up 1.3%, having benefited earlier from relief over earnings from Nvidia (.NVDA.O), opens new tab, which beat sales estimates.
"I think the paring of earlier gains is mainly due to the fact that the ruling doesn't change much fundamentally," said Michael Brown, senior research strategist at Pepperstone.
"While the journey on tariffs might have changed, the destination and endgame for most hasn't."
Britain's FTSE 100 index (.FTSE), opens new tab, meanwhile, largely shrugged off the news and was last flat.
"Is this a sign that stock markets in countries who did manage to score trade deals with the U.S. in recent weeks, could be at a disadvantage if tariffs are reversed? This could be a short-term theme to watch," said Kathleen Brooks, research director at XTB.
Britain was the first country to secure a trade deal with the U.S. and will hold talks with Washington next week to speed up the implementation of that deal, the Financial Times reported.
In Asia, Japan's Nikkei (.N225), rose 1.9%, while South Korean shares (.KS11), climbed 1.9% to a nine-month high. Chinese blue chips (.CSI300), firmed 0.6%.
DOLLAR RALLY FADES
The news of the court decision initially hit traditional safe-haven currencies, which have benefited from tariff fears punishing the U.S. dollar.
The dollar gained nearly 1% against the Japanese yen earlier but was last down 0.2%. It was down 0.2% against the Swiss franc after an earlier rally.
Another beneficiary of dollar woes, the euro dropped as much as 0.7%, but was last up 0.4% against the U.S. currency.
U.S. Treasury yields, which have been under pressure with investors unnerved by Trump's hefty tax and spend bill, initially rose on Thursday but retreated to trade flat.
Yields on 10-year Treasuries , which move inversely with prices, were at 4.48% as markets remained doubtful on the chance of a Federal Reserve rate cut anytime soon.
Longer-dated, 30-year yields dipped from the closely watched 5% level, last at 4.98%.
Minutes of the last Fed meeting showed "almost all participants commented on the risk that inflation could prove to be more persistent than expected" due to Trump's tariffs.
A rate cut in July is now seen at around a 20% chance, while September is at around 70%, having been more than fully priced a month ago.
In commodity markets, gold was down 0.7% to $3,313 an ounce .
Oil prices rose initially then eased, with investors watching for an OPEC+ decision on raising output in July, while the U.S. barred
Chevron (CVX.N), from exporting Venezuelan crude. Brent was down 0.1% at $64.85.
Additional reporting by Ankur Banerjee in Singapore, Stella Qiu in Sydney and Summer Zhen in Hong Kong; Editing by Sam Holmes, Lincoln Feast, Joe Bavier and Jane Merriman
