Global stocks gain on trade optimism, set for best week since January

LONDON (Reuters) – Global stocks rose on Friday after a report that U.S.-China trade talks were making progress and a vote by UK lawmakers to delay Britain’s exit from the European Union.

FILE PHOTO: The London Stock Exchange Group offices are seen in the City of London, Britain, December 29, 2017. REUTERS/Toby Melville

European stocks markets opened higher, with the pan-European STOXX 600 index reaching its highest since October. Britain’s benchmark FTSE 100 index outperformed, boosted by growing expectations Britain will not leave the EU on March 29 without a deal.

S&P 500 futures also gained, indicating stocks would open higher on Wall Street.

Chinese Vice Premier Liu He spoke by telephone with U.S. Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lightizer, and the two sides made substantive progress on trade, the news agency Xinhua reported.

Investor sentiment on trade has see-sawed on rumblings coming out of the ongoing negotiations between the world’s two biggest economies, which have both slapped tit-for-tat tariffs on each other.

Only on Thursday, Mnuchin said a summit to seal a trade deal between U.S. President Trump and Chinese President Xi Jinping will not happen at the end of March as previously discussed because more work is needed in the negotiations.

“There are still quite a lot of moving parts (to Brexit)…The markets have reacted purely to the rhetoric (on trade talks) and no action,” said deputy chief investment officer Edward Park, at asset manager Brooks MacDonald.

In Asia, MSCI’s broadest index of Asia-Pacific shares outside of Japan gained over half a percent.

MSCI’s All-Country World Index, which tracks shares in 47 countries, was up 0.3 percent on the day and was set for its best week since early January.

The Shanghai Composite Index added 1 percent and Japan’s Nikkei climbed 0.8 percent.

South Korea’s KOSPI rose nearly 1 percent. The index had risen as much as 1.2 percent but gave up some gains following reports that North Korea might suspend nuclear talks with the United States.

Comments from Chinese Premier Li Keqiang also helped sentiment. His remarks suggested Beijing is ready to roll out more forceful stimulus to bolster China’s economy.

China has so far promised billions in tax cuts and infrastructure spending, as weakening domestic demand and the trade war with the United States curbs economic growth.

European stocks rose to a five-month high after Britain’s parliamentary vote on Brexit. The pound was flat on the day at $1.3247.

“We view the overall outcome of this week’s votes … as positive for UK assets,” strategists at BNP Paribas wrote in a research note. “Indeed, the pound has risen by 2 percent on the week. Yet, while most of the routes ahead now look net positive, we still expect a bumpy path.”

Elsewhere in currencies, the dollar index slipped 0.1 percent to 96.670 after rising 0.25 percent on Thursday to recover from a nine-day trough of 96.385.

The U.S. currency was flat at 111.70 yen. It had dipped to 111.49 yen after the Bank of Japan left interest rates unchanged.

The central bank offered a bleaker assessment of exports and output, as global demand waned. Observers said, that it may be too early to expect the BOJ to ease policy further.

The euro edged up 0.1 percent to $1.1315 after slipping 0.2 percent overnight.

In commodities, U.S. crude futures briefly hit a 2019 high but later retreated along with benchmark Brent oil as worries about the global economy and robust U.S. production put a brake on prices.

Brent was down nearly 1 percent at $66.60 per barrel, while U.S. crude oil fell half a percent to $58.3 per barrel.

Reporting by Ritvik Carvalho; additional reporting by Sujata Rao and Josephine Mason in London and Shinichi Saoshiro in Tokyo; editing by Larry King

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