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* ECB announces fresh stimulus measures
* Euro STOXX 600 up 0.7% to highest since July
* Euro zone bonds fall, euro weakens
* MSCI's world equity index touches highest since Aug. 1
* U.S. and China ease trade war tensions
* Yuan rises to three-week high
Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds details of ECB, market reaction, investor comment)
By Tom Wilson
LONDON, Sept 12 (Reuters) - European stocks climbed on Thursday to their highest in seven weeks and bonds fell as the European Central Bank's new stimulus measures and mutual concessions by the United States and China in their trade dispute buoyed riskier bets.
The Euro STOXX 600 gained 0.7% after the ECB approved fresh stimulus measures to hit its highest level since July 25. Bourses in Paris and Frankfurt gained 0.8%, rebounding strongly after giving up early gains before the ECB statement.
The ECB cut rates deeper into negative territory and restarted its program of bond buying, known as quantitative easing, with a formulation that suggests purchases could go on for years.
The policy package added wind to investors' sails, already boosted by signs of detente in the U.S>-China trade war.
In mutual concessions, U.S. President Donald Trump had moved to delay an increase in tariffs on Chinese goods by two weeks, while China exempted some U.S. drugs and other goods from tariffs. 1/8
MSCI's world equity index, which tracks shares in 47 countries, was up 0.1% after rising to its highest since Aug. 1. It was on course for its seventh straight day of gains, its best winning streak since early June.
Wall Street futures gauges gained between 0.3%-0.7%.
The ECB cut its deposit rate to a record low of -0.5%, promised that rates would stay low for longer and said it would restart bond purchases at a rate of 20 billion euros a month from Nov. 1.
With other major central banks easing monetary policy, Germany at risk of recession and euro zone governments doing little to prop up the bloc, ECB policymakers were forced to deploy most of their remaining tools.
Euro zone bond yields tumbled and the euro weakened 0.7% as a result.
"ELEPHANT IN THE ROOM"
Market players generally praised the package, though some said there were doubts about the impact of the package. Others noted outstanding questions about the details of the package - not least the composition of the ECB's bond buying program.
"The question remains whether this will be enough to get growth and inflation back on track as the real elephant in the room is fiscal policy," wrote Carsten Brzeski, chief economist at ING Germany.
Though ECB President Mario Draghi had all but promised more support, the central bank's exact moves were far from certain.
A new round of bond buying, the bank's most potent weapon, was seen as an outside option, not least because policymakers from Germany to France were skeptical about the move.
"The nominally open-ended nature of the QE program is better than expected," said Arne Petimezas, an analyst at AFS, a brokerage in Amsterdam.
"But the purchase volumes are still relatively low, and it will take about a year before excess liquidity is back at its prior peak."
After the ECB decision, the U.S. Federal Reserve is expected to cut rates next Wednesday and the Bank of Japan and Swiss National Bank next Thursday also may ease.
Trump, who has called for a further cut on rates by the Fed, tweeted his support for the ECB's rate cut.
After the ECB's move, Germany's 10-year bond yield fell 8 basis points to -0.64% after the ECB's statement, while 30-year debt fell almost 20 bps at one point.
Euro zone government bonds had earlier risen from record lows reached a week ago on doubts that the ECB would resume asset purchases.
The euro, after initially rising, dropped sharply to as low as $1.0955 as investors digested news of the rate cut and relaunch of QE. The single currency had hit a 28-month low earlier this month of $1.0926, and has shed 3.5% since June.
The dollar rose against a basket of currencies and was last up 0.2% at 98.568
The optimism over trade had earlier emboldened risk-hungry investors, with the Chinese yuan gaining 0.4% against the dollar, touching a three-week high of 7.0855.
Stephen Gallo, European head of FX strategy at BMO Capital Markets, said he was surprised by the rebound, particularly in the yuan pushing beyond 7.10 to the dollar.
For Reuters Live Markets blog on European and UK stock markets, please click on: (Reporting by Tom Wilson; additional reporting by Tommy Wilkes and Danilo Masoni; editing by Larry King and Gareth Jones)