Tensions remained high, prompting a rush on safe-haven assets such as bonds, gold and the Japanese yen (Ludovic MARIN)

London (AFP) – Stocks advanced Thursday as investors hunted for bargains following heavy losses caused by anxiety over the deepening US-China trade war.

But tensions remained high, with haven assets bonds, gold and the yen remaining in high demand.

Oil prices rebounded, a day after slumping to seven-month low points on higher-than-expected US crude supplies.

“It’s safe to say investors are struggling to make up their mind at the moment,” noted Craig Erlam, senior market analyst at Oanda trading group.

“On the one hand, the trade war is a significant downside risk to the global outlook but on the other, central banks are cutting rates around the world in a bid to halt the slowdown before it takes hold.”

Equities tumbled this week after Beijing allowed the yuan to slide sharply against the dollar following US President Donald Trump’s announcement that he would impose 10 percent tariffs on another $300 billion in Chinese goods from September 1.

But Beijing’s move to then stabilise the yuan has helped to ease investor fears.

China’s central bank on Thursday set the currency’s central parity rate above 7.0 against the dollar for the first time in 11 years.

Beijing does not “want a very sharp, sudden move weaker that could result in a big jump in capital outflow”, said Julian Evans-Pritchard, senior China economist at Capital Economics.

“So they are trying to effectively manage the process and engineer a gradual depreciation,” he told AFP.

Multiple rounds of tit-for-tat tariffs between the United States and China have hammered trade and raised concern for the health of the global economy.  

Negotiators are set to reconvene in Washington in early September for another round of talks after last week’s discussions in Shanghai, but hopes for an agreement are low.

German sportswear maker Adidas on Thursday warned that “everybody will lose” if a currency war ignites between China, the United States and other countries, while reporting continued strong earnings in its second quarter.

Interest rate cuts this week by central banks in India, Thailand and New Zealand and weak German industrial data have underscored fears about economic growth being at risk around the world.

Markets now believe that key central banks will cut interest rates further to stave off, or at least alleviate, any coming recession, analysts said, warning however that they had limited opportunity to act.

– Key figures around 1045 GMT –

London – FTSE 100: UP 0.2 percent at 7,210.66 points

Frankfurt – DAX 30: UP 0.8 percent at 11,748.40

Paris – CAC 40: UP 1.3 percent at 5,333.62

EURO STOXX 50: UP 1.1 percent at 3,346.43

Tokyo – Nikkei 225: UP 0.4 percent at 20,593.35 (close)

Hong Kong – Hang Seng: UP 0.5 percent at 26,120.77 (close)

Shanghai – Composite: UP 0.9 percent at 2,794.55 (close)

New York – Dow: DOWN 0.1 percent at 26,007.07 (close)

Euro/dollar: UP at $1.1207 from $1.1203

Pound/dollar: UP at $1.2163 from $1.2140 around 2100 GMT

Euro/pound: DOWN at 92.14 pence from 92.26 pence 

Dollar/yen: DOWN at 106.08 yen from 106.23 yen

Brent North Sea crude: UP 66 cents at $56.89 per barrel

West Texas Intermediate: UP $1.12 at $52.21 per barrel

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