LONDON/SYDNEY - World shares held just below recent record highs on Monday as the revival of US/Canada trade talks helped risk sentiment, while the dollar dipped on the prospect of this week's US jobs data ushering in an earlier Fed rate cut.

Canada on Sunday said it had rescinded its digital services tax in a bid to advance trade negotiations, bowing to pressure from US President Donald Trump.

The talks are aimed at getting a deal done by July 21, extending Trump's original July 9 deadline for his "reciprocal" tariffs. Officials have suggested most deals could now be done by the September 1 Labor Day holiday.

Investors were also keeping a wary eye on the progress of a huge US tax-cutting and spending bill slowly making its way through the Senate, with signs it may not make it by Trump's preferred July 4 deadline.

The Congressional Budget Office estimated the bill would add $3.3 trillion to the nation's debt over a decade, testing foreign appetite for US Treasuries.

There was no doubting the demand for the US tech sector and megacap growth stocks including Nvidia, Alphabet and Amazon. Nasdaq futures rose another 0.5 percent, while S&P 500 e-minis added 0.4 percent.

"We have been surprised at just how resilient markets have been in the face of a tremendous amount of uncertainty," Kevin Gardiner, global investment strategist at Rothschild & Co, said.

"Markets continue to look resilient, though we note that we haven't seen equity valuations look more expensive since 2000," he added.

European shares nudged down, though European defense stocks led sectoral gains with a rise of just over 1 percent. The sector has remained buoyant since last week's NATO pledge to spend 3.5 percent of GDP on core defence and 1.5 percent on broader defense-related measures, a jump worth hundreds of billions of dollars a year.

Attention also turned to a European Central Bank conference in Sintra, key eurozone inflation reports due this week and the closely-watched US non-farm payrolls report on Thursday.

Dollar doldrums

A holiday on Friday means US payrolls data will come a day early, with analysts forecasting a rise of 110,000 in June and a rising jobless rate reaching almost a year high at 4.3 percent.

The resilience of the labor market is a major reason the majority of Federal Reserve members say they can afford to wait on cutting rates until they can gauge the true impact of tariffs on inflation, so a weak report would stoke speculation of a rate cut in July rather than September.

The prospect of policy easing has helped Treasuries weather worries on the ballooning US budget deficit.

Ten-year Treasury yields fell 3 basis points to 4.25 percent, having fallen 7 bps last week.

The dollar struggled in part over concern that tariffs and policy whipsaws from the White House will drag on economic growth.

The euro rose to $1.1721, having climbed more than one percent last week to its highest levels since 2021 against a broadly weak dollar.

Sterling held just below a similar peak hit last week, trading just below $1.37.

The dollar was down 0.4 percent to 144.13 yen and the dollar index eased 0.2 percent to 97.201, a whisker above three-year lows.

The dollar has fallen by more at this stage in the year than in any previous year since the US moved to a free-floating exchange rate in 1973.

"At this point, further weakness could become self-reinforcing as underhedged European/Asian portfolios chase the move," James Reilly, a senior markets economist at Capital Economics, said.

In commodity markets, the general revival in risk sentiment weighed on gold, which rose 0.5 percent to $3,289 an ounce but held below April's record top of $3,500.

Oil prices continued to struggle on concerns about plans for increased output from OPEC+, which contributed to a 12 percent slide last week.

Brent rose 0.3 percent to $68 a barrel, while US crude rose 0.25 percent to $65.7 per barrel.