European stocks rise on optimism for trade talks, shutdown deal

European stocks rise on optimism for trade talks, shutdown deal

London Stock Exchange
The London Stock Exchange. (REUTERS/Toby Melville)

LONDON: European stock markets rose on Tuesday (Feb 12) on optimism over US-China trade talks and signs of a provisional deal to avoid another US government shutdown.

Wall Street followed European gains in morning trading, jumping more than one per cent after news that senior US lawmakers had reached the tentative agreement.

However Donald Trump has yet to comment on the deal, which provides nearly US$1.4 billion in money for construction of a wall on the border with Mexico - far short of the US$5.7 billion the US president had sought for the controversial project.

"Markets are questioning what level of support a tentative deal to avoid another government shutdown will receive from US lawmakers and President Donald Trump," said analysts at Charles Schwab.

And there remains "uneasiness regarding the ongoing US/China trade negotiations and some key inflation data looming on the week's horizon," they said.

IG analyst Joshua Mahony agreed, saying that "a significant amount of global sentiment rests on 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 on Thursday and Friday, ahead of a March 1 deal deadline.

Investors responded positively to reports that 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.

US markets pushed upwards in morning trading, with the DJIA index jumping 1.25 per cent.

Oil prices meanwhile rose nearly two per cent after OPEC said it sharply reduced production last month, with the world's top exporter Saudi Arabia slashing output.

'NO GUARANTEES'

Eurozone shares closed up to one percent higher, but London lagged behind its peers as the Brexit-weary British pound clawed back some losses after dropping sharply on Monday on dismal monthly GDP and manufacturing data.

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

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 US$200 billion worth of Chinese imports more than double.

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

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

Key figures around 1640 GMT:

London - FTSE 100: UP 0.1 per cent at 7,133.14 points (close)

Frankfurt - DAX 30: UP 1.0 per cent at 11,126.08 (close)

Paris - CAC 40: UP 0.8 per cent at 5,056.35 (close)

EURO STOXX 50: UP 0.8 per cent at 3,190.75

New York - Dow: UP 1.3 per cent at 25,381.54

Tokyo - Nikkei 225: UP 2.6 per cent at 20,864.21 (close)

Hong Kong - Hang Seng: UP 0.1 per cent at 28,171.33 (close)

Shanghai - Composite: UP 0.7 per cent at 2,671.89 (close)

Euro/dollar: UP at US$1.1315 from US$1.1276 at 2200 GMT Monday

Dollar/yen: UP at 110.49 from 110.38

Pound/dollar: UP at US$1.2891 from US$1.2855

Euro/pound: UP at 87.78 pence from 87.68 pence

Oil - Brent Crude: UP US$1.56 at US$62.53 per barrel

Oil - West Texas Intermediate: UP US$1.64 cents at US$53.26

Source: AFP/de

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