Stock markets climb on trade talks optimism

Donald Trump said the China-US trade talks were 'doing very well'

Stock markets rose Friday after US President Donald Trump struck an upbeat note on trade talks with China, while the pound ended a volatile Brexit-fuelled week on a strong note.

The main European markets all closed higher, and US stocks were also up in the early New York afternoon with "reports of progress on the US-China trade front seeming to buoy sentiment", said analysts at Charles Schwab brokerage.

Tokyo's main stocks index ended the day higher, too, despite the Bank of Japan issuing a more downbeat assessment of the world's third biggest economy, as a broader global slowdown impacts exports and production.

"Brexit volatility appears to have calmed," noted Joshua Mahony, senior market analyst at IG trading group. "Meanwhile, US-China trade talk hopes have improved."

While concerns about the global growth outlook remain, investor confidence has been supported by ongoing optimism that the United States and China will eventually hammer out a deal to end their long-running trade row.

Trump on Thursday provided fresh cheer by telling reporters "we are doing very well with China talks", adding that "we are getting what we have to get".

He also said "one way or the other, we're going to know over the next three to four weeks".

- 'Talk is cheap' -

On Friday, China approved a foreign investment law that will abolish the forced transfer of technology from foreign firms to local joint-venture partners, addressing a key point of anger in the White House.

"There’s still no guarantee that these (US-China talks) can be concluded, but at least we’ve seen an indication that the wait will only be another three to four weeks," said James Hughes, chief market analyst at Axitrader.

"This has the potential to fuel risk appetite in the interim period."

On currency markets the pound climbed versus the dollar and euro after a week that saw wild fluctuations for the UK unit triggered by Brexit twists and turns.

British Prime Minister Theresa May's EU withdrawal agreement was this week rejected by parliament for a second time.

But the divorce deal could yet return from the dead should hardcore Brexiteers fear a delay could produce a softer Brexit that what is currently on offer.

"There's still a significant amount of tail risk in being overly exposed to sterling" because of Brexit uncertainty, said Michael Hewson, chief market analyst at CMC Markets UK.

"Ultimately talk is cheap, and markets require certainty, something that still remains in short supply."

- Key figures around 1640 GMT -

London - FTSE 100: UP 0.6 percent at 7,228.28 points (close)

Frankfurt - DAX 30: UP 0.9 percent at 11,685.69 (close)

Paris - CAC 40: UP 1.0 percent at 5,405.32 (close)

EURO STOXX 50: UP 1.3 percent at 3,386.08

New York - DOW: UP 0.7 percent at 25,894.83

Tokyo - Nikkei 225: UP 0.8 percent at 21,450.85 (close)

Hong Kong - Hang Seng: UP 0.6 percent at 29,012.26 (close)

Shanghai - Composite: UP 1.0 percent at 3,021.75 (close)

Pound/dollar: UP at $1.3295 from $1.3238 at 2100 GMT Thursday

Euro/pound: DOWN at 85.11 pence from 85.36

Euro/dollar: UP at $1.1315 from $1.1304

Dollar/yen: DOWN at 111.56 yen from 111.65 yen

Oil - Brent Crude: DOWN 43 cents to $66.80 per barrel

Oil - West Texas Intermediate: DOWN 20 cents to $58.41 per barrel

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