Even as US President Donald Trump stirred up border controversy at a raucous rally in the frontier city of El Paso, lawmakers said a provisional deal had been reached (Nicholas Kamm)

London (AFP) – Global stock markets rose Tuesday on optimism over US-China trade talks and a provisional deal to avoid a Washington shutdown.

“European markets are on the rise… with the optimism seen throughout the Asian session transitioning into Europe,” said IG analyst Joshua Mahony.

“A significant amount of global sentiment rests on (US President) Donald Trump’s shoulders, with the ability to break the deadlock in talks with China and avert another government shutdown key for market direction.”

Negotiations are under way in Beijing aimed at averting a planned increase in US tariffs that could slow the global economy.

Top-level officials are set to arrive in the Chinese capital for meetings Thursday and Friday, ahead of a March 1 deal deadline.

Investors responded positively to reports that Donald Trump wants to meet Xi Jinping “very soon”, just days after the US president had appeared to write off an imminent summit with his counterpart.

In Europe around midday, London’s benchmark FTSE 100 index was up 0.3 percent.

Eurozone indices Frankfurt and Paris jumped 1.2 percent, while the euro and pound dropped versus the dollar.

The Tokyo stock market — returning from Monday’s public holiday — closed 2.6 percent higher, as traders played catch up and with Japanese exporters further benefitting from a resurgent dollar.

Oil prices jumped about one dollar awaiting OPEC’s monthly production update.

“US-China trade talks continue and that has boosted European stock markets,” said analyst David Madden at CMC Markets.

“The fact that trade discussions are taking place is seen as a positive by traders, but there are no guarantees that anything will come of the talks.”

Washington is demanding changes from Beijing on what it says are unfair commercial practices.

Failure by the economic superpowers to reach an agreement would see US tariffs on $200 billion worth of Chinese imports more than double.

Meanwhile, US lawmakers said they had reached an agreement in principle on border security.

The announcement assuaged fears of a chaotic repeat of the recent 35-day partial US government shutdown — the longest in the country’s history.

The agreement included $1.4 billion in funding for a wall on the US-Mexico border — a key campaign promise of Trump.

News of the deal — which still needs to be accepted — came as the president stirred up border controversy at a raucous rally in the frontier city of El Paso.

– Dollar rises –

The greenback has returned to early January heights, on the US currency’s longest unbroken rally in three years — despite the Fed recently changing course on interest rate hikes.

Investors have turned to the greenback as concern has built over poor growth forecasts and the health of other currencies in Europe and beyond.

Multiple central banks have fallen in line with the Fed’s dovish stance since it held interest rates unchanged two weeks ago.

The weak yen saw Tokyo-listed exporters such as Toyota, Honda and Nissan rise.

The Brexit-weary British pound clawed back some losses after dropping sharply Monday on dismal monthly GDP and manufacturing data.

 – Key figures around 1200 GMT –

London – FTSE 100: UP 0.3 percent at 7,152.50 points

Frankfurt – DAX 30: UP 1.2 percent at 11,150.03

Paris – CAC 40: UP 1.2 percent at 5,072.32

EURO STOXX 50: UP 1.1 percent at 3,198.84

Tokyo – Nikkei 225: UP 2.6 percent at 20,864.21 (close)

Hong Kong – Hang Seng: UP 0.1 percent at 28,171.33 (close)

Shanghai – Composite: UP 0.7 percent at 2,671.89 (close)

New York – Dow: DOWN 0.2 percent at 25,053.11 (close)

Euro/dollar: DOWN at $1.1275 from $1.1276 at 2200 GMT Monday

Dollar/yen: UP at 110.54 yen from 110.38

Pound/dollar: DOWN at $1.2846 from $1.2855

Euro/pound: UP at 87.78 pence from 87.68 pence

Oil – Brent Crude: UP $1.09 at $62.59 per barrel

Oil – West Texas Intermediate: UP 78 cents at $53.19


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