LONDON/TOKYO - An Asia stocks rally lifted world indices to record highs on Monday, and the dollar pared recent gains ahead of talks in London aimed at mending a trade rift between the United States and China.

MSCI's broadest index of world shares climbed 0.2% to a record high of 893.88, as European indices steadied and Asian markets closed higher.

The Japanese Nikkei closed almost 1% higher, China's blue-chip CSI300 Index climbed roughly 0.3%, while the Shanghai Composite Index gained 0.4%.

Top trade representatives from Washington and Beijing are due to meet for talks expected to focus on critical minerals, whose production is dominated by China.

"Trade policy will remain the big macro uncertainty," said Kyle Rodda, a senior financial market analyst at Capital.com. "Signs of further momentum in talks could give the markets fresh boost to kick-off the week."

U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will represent Washington in talks with China, U.S. President Donald Trump said in a social media post. China's foreign ministry said Vice Premier He Lifeng will be in Britain for the first meeting of the China-U.S. economic and trade consultation mechanism.

Wall Street stocks had closed sharply higher on Friday after the closely watched monthly U.S. jobs data eased concerns about damage to the world's biggest economy from Trump's unpredictable tariff regime.

Sentiment was also weighed down by a standoff in Los Angeles that led to Trump calling in the California National Guard to quell demonstrations over his immigration policies.

The dollar fell 0.5% against the yen to 144.09, trimming its 0.9% jump on Friday. The European single currency rose 0.2% to $1.1422. Sterling traded at $1.3568 , up almost 0.4%.

CHINA EXPORT GROWTH SLOWS

U.S. job growth slowed in May by less than had been forecast, data showed on Friday. But dour economic readings from China added to evidence the trade war is taking a toll.

China's export growth slowed to a three-month low in May, while factory-gate deflation deepened to its worst level in two years, separate reports showed on Monday.

Attention now turns to U.S. inflation data on Wednesday that may adjust expectations for the timing of any rate cuts by the Federal Reserve. The Fed is in a blackout period ahead of its June 18 policy decision.

"Markets have entered a tactical pause following a strong May, but beneath the surface, fragilities are building," said Bruno Schneller, managing director at Erlen Capital Management, noting that the U.S. CPI release is expected to show another rise, signaling that inflation remains sticky.

"While this may offer some near-term support for the U.S. dollar, broader macro dynamics – notably fiscal expansion, rising structural deficits, and political unpredictability – are increasingly clouding the outlook for both rates and currencies," he said.

Gold rose around 0.35% to $3,322 per ounce after a 1.3% fall on Friday. U.S. crude fell 16 cents to $64.42 a barrel following a 1.9% surge late last week.

(Reporting by Nell Mackenzie in London and Rocky Swift in Tokyo; Editing by Dhara Ranasinghe, Jamie Freed and Bernadette Baum)