* Global markets rise after Biden-Xi virtual talks * Talks were aimed at improving icy relations * U.S. dollar holds 16-month high LONDON, Nov 16 (Reuters) - Global stock markets marched on towards new peaks after U.S. President Joe Biden and Chinese leader Xi Jinping had over three hours of virtual talks, while the dollar held a 16-month high ahead of U.S. retail sales data due later on Tuesday. The closely watched conversation between the leaders of the world’s biggest economies appeared to yield no immediate outcome but is widely seen as a joint effort to improve icy relations and avoid direct confrontation. “Markets are trading north courtesy of the Biden-Xi virtual summit which seems to have somewhat defused U.S.-China tensions,” said Stephane Ekolo, global equity strategist at Tradition in London. “Market participants view such a summit as a positive effort to stabilise a tense relationship, fuelling risk-on mode appetite,” he added. The pan-European STOXX 600, German blue chips and the Paris CAC 40 benchmark all hit new record highs in morning trading, rising between 0.4 and 0.5%. Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.3% to its highest level since Oct. 27. Wall Street futures ticked up and MSCI’s world stock index hovered in striking distance of last week’s historic peaks. While some investors are becoming wary of buying into record-breaking equity markets, many analysts believe there is some upside left. “We believe that markets will continue to be supported by earnings growth in 2022, albeit at a slower pace”, wrote chief market strategist Julien Lafargue in Barclays Private Bank’s outlook into 2022. The dollar index was flat but holding on to levels not seen since July 2020 while the euro, by contrast, was trading at prices last hit 16 months ago with a fresh low of $1.1352. Rising cases of COVID-19 infections are weighing on the euro as some countries, such as Austria and the Netherlands, have implemented new social restrictions to curb the spread of the disease. Another factor playing against the common currency was European Central Bank President Christine Lagarde pushing back on Monday against bets for tighter monetary policy, saying doing so now could choke off the euro zone’s recovery. The yield of the benchmark German 10-year government bond was flat at -0.244%, while the 10-year U.S. Treasury yields was also little changed at 1.6129%, still a substantial jump since the one-month low of 1.42% hit one week ago. Traders were waiting for U.S. retail sales, trade prices and industrial production data for October to get another insight about the health of the world’s biggest economy. Oil rebounded from a weak start with Brent futures adding 0.65% at $82.58 a barrel. Spot gold rose 0.53% at $1,872 an ounce and reached a fresh five month high. Reporting by Julien Ponthus and Alun John; Editing by Sam Holmes, Shri Navaratnam, Robert Birsel and Timothy Heritage