* European shares mostly higher but gains limited
* Investors betting stimulus plans can ward off recession
* Safe-haven assets recover after Monday sell-off
* Focus shifting to Fed minutes, Jackson Hole symposium
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tommy Wilkes
LONDON, Aug 20 (Reuters) - Stock markets edged higher onTuesday as investors welcomed signs that more monetary andfiscal stimulus was on its way, hoping more easing would helpstave off a major global economic downturn.
After a tumultuous first half of August when investorsdumped equities and poured their money into government debt andother safe havens, some calm has returned to markets this weekamid talk of more stimulus in China and Germany.
The pan-region Euro Stoxx 600 eked out gains of 0.1%, following on from Monday's rally, while France's CAC40 climbed 0.13% and Britain's FTSE 100 0.4%.Germany's DAX was modestly lower, however.
The MSCI world equity index, which tracksshares in 47 countries, rose 0.1%, although the index remainsdown more than 3% so far in August.
Futures markets point to Wall Street opening more or lessflat on Tuesday.
Investors have this week cheered signs that policymakers arewilling to do more to support their economies and counter thedamage caused by international trade frictions, led by thebruising Sino-U.S. trade war.
And not everyone thinks the economy is in as bad a shape asthe recent market sell-off - which accelerated last week aftershort-term borrowing costs in the United States rose abovelonger-term yields in a possible recession signal - has implied.
"We still see limited near-term recession risks as centralbanks' dovish pivot helps stretch the economic cycle, yetcaution that trade and geopolitical tensions pose downsiderisks," strategists at BlackRock Investment Institute said intheir weekly research note.
China's new lending reference rate was set slightly lower onTuesday after the central bank announced interest rate reformsdesigned to reduce corporate borrowing costs.
Meanwhile Germany's coalition government has said it wouldbe prepared to ditch its balanced budget rule to counter apossible recession.
The immediate focus now shifts to the minutes, due onWednesday, of the U.S. Federal Reserve's last meeting.
Traders are also awaiting the Fed's Jackson Hole seminar anda Group of Seven summit this weekend for clues on whatadditional steps policymakers will boost economic growth.
The Washington Post reported on Monday that senior WhiteHouse officials are discussing a temporary payroll tax cut tohelp the economy.
SAFE HAVENS RECOVER
Safe-haven assets, which panicked investors had flocked tolast week, were back in demand after suffering a bout of sellingon Monday.
The 10-year German bund yield fell 4 basis points to -0.688%as investors bought into the benchmark euro zone bond, althoughyields were above the record low of -0.727%.
The U.S. Treasury 10-year bond yield dropped 3 bps to1.563%, above recent three-year lows.
Financial markets went into a tailspin last week after theTreasury yield curve briefly inverted when short-term yieldstraded above those of long-term paper. The inversion haspresaged previous recessions and is widely watched by markets.
Spot gold prices rose 0.6% to $1,503 after tumbling1.2% on Monday, their biggest daily drop in a month.
The Japanese yen, popular with nervous investors, rose 0.3%to 106.33 yen per dollar but was well below the recenthigh of 105.05 touched last week.
The euro was little moved against the dollar at $1.1082.
Investors sold Italian government debt as the head of theruling 5-Star Movement signaled the imminent demise of thecoalition government by thanking Prime Minister Giuseppe Contefor his time in office.
Conte is set to address parliament later on Tuesday todefend his record after the 5-Star's coalition partner, thefar-right League, said it would present a motion of noconfidence in the administration.
The benchmark 10-year Italian bond yield rose 4 basis pointsto 1.47%.
In energy markets, oil prices initially extended Monday'srally on broader market optimism before the gains fizzled. Brentcrude was last down marginally at $59.67 a barrel. U.S.crude also fell a touch to $56.11 a barrel.
UNCONVENTIONAL POLICY
The key for markets now is whether pledges for moreaccommodative policy, either monetary or fiscal or a combinationof the two, are enough to assuage concerns about the state ofthe global economy and end fears of recession.
In a sign of how far some central banks are willing to ease,Australia's central bank discussed unconventional monetarypolicies including negative interest rates at its Aug. 6 boardmeeting, its minutes showed.
Antoine Bouvet, senior rates strategist at ING, said theReserve Bank of Australia minutes were the most important newsof the day because of what they said about easing moregenerally.
"It spells out what the market is implicitly pricing -non-standard measures are difficult to withdraw," he said. "Itis reasonable for rates (government debt) markets to price thosemeasures remaining a feature for a long time."
(Additional reporting by Virginia Furness and Saikat Chatterjeein London; Editing by Hugh Lawson and Jan Harvey)