Optimism that China and the United States will eventually hammer out a trade deal has helped global markets rack up huge gains so far this year (MARIO TAMA)

London (AFP) – Asian and European stock markets diverged Thursday as growing expectations that China and the United States will reach a trade agreement were offset by profit-taking, dealers said.

Hopes Britain will avert crashing out of the EU next week also instilled some optimism on trading floors, with the pound extending gains against the dollar.

High-level talks between the world’s top two economies resumed Wednesday in Washington, with reports saying they are edging towards an agreement to bring the curtain down on a long-running row that helped batter markets last year.

Bloomberg News said the deal they are working on would give China until 2025 to meet pledges on purchases and to let US firms wholly own their businesses in the country.

It said the aim was to get everything in place for presidents Donald Trump and Xi Jinping to sign off on a trade deal.

White House economic adviser Larry Kudlow said the talks were “making good headway” but added: “We’re not there and we hope this week to get closer.”

The Bloomberg report follows an article in the Financial Times saying both sides were closing in on an agreement. 

“Trade negotiations between China and the US appear to be gaining steam,” said Oanda analyst Edward Moya.

“Both sides appear to be ironing the final details and if we do see a final summit set up for President Trump and Xi, risk assets may accelerate higher.”

David Madden, a market analyst at CMC Markets UK, pointed out that Kudlow had flagged movement on intellectual property theft and hacking, which are key bugbears of the White House.

“These issues have been a major point of contention for the US, and the fact that they are being discussed, indicates that Beijing are serious about reaching a deal,” he added.

Global stocks have enjoyed a stellar year so far thanks to confidence in a deal being reached.

– May, Corbyn hold talks –

In London, British Prime Minister Theresa May met opposition Labour leader Jeremy Corbyn on Wednesday for crisis talks on resolving the Brexit crisis with just over a week to go before Britain is due to leave the European Union.

Representatives for both sides described the talks as “constructive” as they look to avert a potentially calamitous no-deal divorce, with another meeting planned for Thursday.

At the same time MPs voted by the narrowest margin for draft legislation that would force the government to seek to delay Brexit beyond the April 12 deadline.

The premier has already said she will seek a second “short” delay at an EU summit on April 10.

The developments provided some support for the pound but parliament remains divided with hardliners fearing a “soft” divorce will leave Britain still linked to the bloc.

– Key figures around 1100 GMT –

London – FTSE 100: DOWN 0.6 percent at 7,375.68 points 

Frankfurt – DAX 30: FLAT at 11,953.79

Paris – CAC 40: DOWN 0.3 percent at 5,452.40

EURO STOXX 50: DOWN 0.1 percent at 3,432.45

Tokyo – Nikkei 225: UP 0.1 percent at 21,724.95 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 29,936.32 (close)

Shanghai – Composite: UP 0.9 percent at 3,246.57 (close)

New York – Dow: UP 0.2 percent at 26,218.13 (close)

Pound/dollar: UP at $1.3162 from $1.3158 at 2100 GMT on Wednesday

Euro/pound: DOWN at 85.34 pence from 85.35 pence

Euro/dollar: DOWN at $1.1232 from $1.1233

Dollar/yen: DOWN at 111.41 yen from 111.49 yen

Oil – Brent Crude: DOWN 22 cents at $69.09 per barrel

Oil – West Texas Intermediate: DOWN 23 cents at $62.23

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Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.