Theresa May heads to Brussels Wednesday hoping to win concessions from EU leaders on their Brexit agreement that she can push through parliament (Daniel LEAL-OLIVAS)

London (AFP) – Stock markets around the world rose Wednesday as investors tracked growing optimism that China and the United States will reach a trade deal and as the UK faced more political turmoil with the resignation of three government MPs over Brexit.

Among currencies, the yuan was among the big gainers following a report that the US has called on China to stabilise the unit as part of any agreement between the world’s top economic powers.

The pound was lower versus the dollar and euro as British Prime Minister Theresa May heads to Brussels later Wednesday to renew her quest to reopen the terms of the country’s Brexit divorce, but appears headed for disappointment.

With less than six weeks until Brexit day, European Commission president Jean-Claude Juncker has agreed to meet May once again, but EU leaders insist they will not restart negotiations.

“I have great respect for Theresa May, for her courage and her assertiveness. We will have a friendly talk tomorrow but I don’t expect a breakthrough,” Juncker said Tuesday.

In a further blow, three MPs on Wednesday quit Britain’s governing Conservatives over Brexit, saying the issue had “re-defined” the party and was “undoing all the efforts to modernise it”.

The trio added that they planned to sit in parliament alongside eight former Labour lawmakers who, also citing their opposition to Brexit, resigned from the main opposition party this week to form the new Independent Group.

Analysts said the resignation of Tory MPs could help trigger a snap general election in the UK.

“With Jean-Claude Juncker claiming he does not expect a breakthrough during Wednesday’s meeting with Theresa May and three Tory MPs defecting from the party…. the pound was in a bad mood,” said Connor Campbell, analyst at traders Spreadex.

London’s benchmark FTSE 100 index was meanwhile higher overall despite a 16 percent slump in the share price of British supermarket group Sainsbury’s.

A planned mega-merger of Sainsbury’s and Walmart-owned Asda raises “extensive competition concerns” and could spark higher prices and less choice, regulators said Wednesday.

In the US meanwhile, President Donald Trump has said trade talks — which resumed in Washington Tuesday — were “going very well” but were “very complex”. 

He also indicated he could push back the March 1 deadline for talks to be concluded — when US tariffs on Chinese goods are due to more than double — saying it is “not a magical date”.

Observers say that while there are no details about the negotiations the fact they are still talking and China appeared responsive to the call for yuan stability was good news.

The upbeat mood on trading floors gave investors confidence to buy higher-risk currencies on Wednesday, including the yuan and South African rand.

– Key figures around 1200 GMT – 

London – FTSE 100: UP 0.3 percent at 7,203.19 points

Frankfurt – DAX 30: UP 0.3 percent at 11,341.96

Paris – CAC 40: UP 0.3 percent at 5,175.57

EURO STOXX 50: UP 0.2 percent at 3,244.46

Tokyo – Nikkei 225: UP 0.6 percent at 21,431.49 (close)

Hong Kong – Hang Seng: UP 1.0 percent at 28,514.05 (close)

Shanghai – Composite: UP 0.2 percent at 2,761.22 (close)

New York – DOW: FLAT at 25,891.32 (close)

Euro/dollar: DOWN at $1.1336 from $1.1342 at 2130 GMT

Pound/dollar: DOWN at $1.3025 from $1.3062

Euro/pound: UP at 87.03 pence from 86.80 pence

Dollar/yen: UP at 110.82 yen from 110.58 yen

Oil – Brent Crude: DOWN 59 cents at $65.86 per barrel 

Oil – West Texas Intermediate: DOWN 31 cents at $55.78

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