* Sterling slips as UK PM describes Brexit deal as difficult * Japan unveils $708 billion in fresh economic stimulus measures * Investors stay on sidelines ahead of a vote in the U.S. Congress * Graphic: 2020 asset performance tmsnrt.rs/2yaDPgn * Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh LONDON, Dec 8 (Reuters) - World stocks fell on Tuesday as investors struggled to keep the rally of recent weeks going with COVID-19 infections still surging and London and Brussels stuck in Brexit purgatory. Europe’s main markets saw a second day of red as the Brexit drama and some fresh U.S.-China tensions offset news that a 90-year-old grandmother from Northern Ireland had become the first person to get a COVID-19 vaccine outside a trial. The pan-European STOXX 600 index was down 0.5% before an expected dip on Wall Street. Sterling was wobbling after falling as much as 1.6% on Monday because of the Brexit nerves. A meeting in Brussels between British Prime Minister Boris Johnston and European Commission President Ursula von der Leyen in the coming days is now seen as possibly the only way to salvage a trade deal. “We’re always hopeful (of striking a deal) but you know there may come a moment when we have to acknowledge that it’s time to draw stumps and that’s just the way it is,” Johnson said on Tuesday, using a cricketing term for the end of play. In contrast to the pound’s buffeting, the euro fended off the angst as a survey showed German investor sentiment was now soaring thanks to the soon-to-be-rolled-out coronavirus vaccines. MSCI’s broadest index of Asia-Pacific shares narrowed its losses overnight as Japan announced a new $700 billion government stimulus package, but it was still down 0.1% by the close. Japan’s Nikkei 225 had dipped 0.3%, Seoul’s Kospi gave back 1.6% of its 20% in November. China was off 0.25% and Hong Kong dropped 0.6% as Sino-U.S. tensions continued to weigh on the market. Chinese Foreign Minister Wang Yi assured U.S. executives that Beijing remained committed to the Phase 1 trade deal with the United States. A report showed China’s purchases of U.S. goods and services as of October, specified in the Phase 1 deal at $75.5 billion for 2020, was about half the level they should be on a pro-rated annual basis. The United States also imposed financial sanctions and a travel ban on 14 Chinese officials over their alleged role in Beijing’s disqualification last month of elected opposition legislators in Hong Kong. Chinese foreign ministry spokeswoman Hua Chunying hit back, saying Beijing would take “firm counter-measures against the malicious actions by the U.S. to safeguard our sovereignty, security and developmental rights”. Nasdaq futures were pointing to a subdued start for the record-high index and for Dow Jones Industrial Average and S&P 500. Tesla announced a $5 billion capital raise on Tuesday, its second such move in three months, as the electric-car maker cashes in on a rally in its shares this year. Some investors are watching whether U.S. policymakers can reinvigorate efforts to pass additional pandemic stimulus. The U.S. Congress is expected to vote this week on a one-week stopgap funding bill to give negotiators more time to strike a compromise, as the business community cautioned inaction could spur a deeper recession. At the same time, California, the nation’s most populous state, announced new restrictions on travel and business activity after record case numbers and hospitalizations. Officials in New York warned it could impose similar restrictions soon, further weighing on the nation’s recovery. The dollar steadied against most currencies as investors eyed potential stimulus and vaccine developments. An index that tracks the dollar against a basket of currencies was little changed at 90.829, not far from 90.471, its weakest since April 2018. The pound was down 0.3% in London at $1.3338, although that was well above Monday’s low of $1.3225. In the bond markets, euro zone government bond yields edged lower ahead of an expected new round of European Central Bank stimulus later this week, and as uncertainty remained over both Brexit and a European Union recovery fund. A two-day EU summit begins Thursday, and the bloc is ready to set up its planned EU stimulus without Hungary and Poland, which are maintaining their veto of the EU budget. British borrowing costs were down, after falling 7 basis points to 0.28% on Brexit worries on Monday. The benchmark 10-year Gilt yield dropped 1 basis point as did those on German Bunds which are at -0.592%. Oil prices fell, extending losses from the previous session. Brent crude fell 0.3% and U.S. crude dipped 0.5%. Prices had come under pressure after Reuters had reported the United States was preparing sanctions on Chinese officials over Hong Kong. Spot gold prices were 0.22% higher at $1,867.70 per ounce, and U.S. gold futures settled up 0.31% at $1,871.7, as investors bet on more stimulus money being pumped into the financial system. “The (global) economic system still needs significant policy support for the reasons we know,” said Joseph Little, chief global strategist at HSBC GAM. But “my sense at the moment is that we are in a phase of healing”.