* U.S. stocks near flat as worries linger over trade, China
* Earnings from Morgan Stanley, JP Morgan Chase disappoint
* Pound supported as May wins confidence vote (Updates with early U.S. markets’ activity, changes dateline, previous LONDON)
By Caroline Valetkevitch
NEW YORK, Jan 17 (Reuters) - Concern over China’s economic outlook and global trade left major world stock indexes little changed on Thursday, while an end to the latest chapter in Britain’s exit from the European Union helped to stabilize sterling.
Disappointing earnings in the U.S. from Morgan Stanley , hot on the heels of similarly weak numbers from JP Morgan Chase earlier in the week, hurt sentiment on Wall Street. Morgan Stanley shares slumped more than 5 percent.
Gains in U.S. healthcare and consumer discretionary shares offset the losses, leaving the U.S. benchmark S&P 500 equity index nearly flat.
Investors have been worried, too, that the U.S. government shutdown was starting to take a toll on the U.S. economy. White House economic adviser Kevin Hassett said the shutdown would shave 0.13 percent off quarterly economic growth for each week that it continues.
On Wall Street, the Dow Jones Industrial Average fell 27.31 points, or 0.11 percent, to 24,179.85, the S&P 500 gained 3.06 points, or 0.12 percent, to 2,619.16 and the Nasdaq Composite added 9.39 points, or 0.13 percent, to 7,044.08.
The pan-European STOXX 600 index rose 0.08 percent and MSCI’s gauge of stocks across the globe gained 0.03 percent.
Some investors took heart from Beijing’s confirmation that Chinese Vice Premier Liu He will head to the United States on Jan. 30 for more negotiations with Washington. Recent talks to resolve a protracted trade battle between the U.S. and China brought little progress.
Adding to recent worries was news that U.S. lawmakers introduced bills on Wednesday that would ban the sale of U.S. chips or other components to Huawei or other Chinese telecoms firms that violate U.S. sanctions or export control laws.
“Concerns about trade policy have been simmering there for a while,” said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
That came shortly before the Wall Street Journal reported federal prosecutors were investigating allegations that Huawei stole trade secrets from U.S. businesses.
European banks tumbled after France’s Societe Generale issued a profit warning, and carmakers skidded after U.S. Senate Finance Committee Chairman Charles Grassley said he thought President Donald Trump was “inclined” to impose tariffs on European cars.
Sterling firmed towards a two-month high against the dollar. It was trading 0.3 percent up at $1.292, inching towards a mid-November high of $1.293.
As expected, British Prime Minister Theresa May narrowly won a confidence vote overnight and invited other party leaders for talks to try to break the impasse on a Brexit agreement.
An outline for Plan B reut.rs/2TVKYfe is due by next Monday and markets are currently assuming that with no easy way forward for May she will have to extend the date of Britain's exit from the European Union past the scheduled March 29.
U.S. Treasury yields ticked up as better-than-expected economic data offset the trade tensions between China and the United States, holding down safe-haven bids for U.S. government debt.
Benchmark 10-year notes last fell 3/32 in price to yield 2.7378 percent, from 2.729 percent late on Wednesday.
Oil prices fell after U.S. crude production neared an unprecedented 12 million barrels per day (bpd).
Brent crude was last down $0.82, or 1.34 percent, at $60.5 a barrel. U.S. crude was last down $1.22, or 2.33 percent, at $51.09 per barrel.
Additional reporting by Marc Jones in London, Wayne Cole in Sydney and Medha Singh; Editing by Bernadette Baum