European stocks rise on dogged trade deal hopes

European equities climbed Wednesday as traders welcomed a Bloomberg News report that the United States and China were still moving towards a possible trade deal, dealers said.

Oil prices also rose as other reports characterised the Organization of the Petroleum Exporting Countries as trending towards a production agreement to cut production further to boost oil prices.

“This morning’s rebound has gained a little more traction on reports that, despite the heating up of rhetoric over trade, the US and China are moving closer to agreeing a deal on the amount of tariffs that would be rolled back in any phase one trade deal,” said CMC Markets analyst Michael Hewson.

Bloomberg quoted people familiar with the talks as saying that US negotiators saw a deal being finalised before US tariffs against China are due to rise on December 15.

They said that issues still outstanding include “how to guarantee China’s purchases of US agricultural goods and exactly which tariffs to roll back.”

New York’s Dow Jones index showed a gain of 0.8 percent in midday trading.

On Tuesday, US President Donald Trump upended markets when he appeared unconcerned about the chances of a deal with China by the end of the year.

But on Wednesday, London’s benchmark FTSE 100 index of major blue-chip firms was up by 0.4 percent, its gains capped by a surging pound that weighed on London-listed multi-nationals whose earnings abroad are converted back into sterling.

The pound jumped to its highest level since May 2017 against the euro on news that British Prime Minister Boris Johnson’s Conservatives were leading in opinion polls ahead of a general election on December 12.

In eurozone trades, Frankfurt added 1.2 percent while Paris gained 1.3 percent.

– ‘Gaming the market’ –

“Stock market sentiment has started to stabilise despite the ongoing trade rumbles,” said IG analyst Joshua Mahony.

After weeks of broad optimism — and White House claims — that the economic superpowers were close to a partial agreement, the president said Tuesday that he could be happy to wait until after next year’s vote.

“I have no deadline,” Trump told reporters. “In some ways, I like the idea of waiting until after the election for the China deal.”

CMC Markets analyst Michael Hewson injected a note of scepticism however, saying Wednesday: “one can’t help feeling that US officials appear to be gaming the market, and that despite the change in tone any deal is no closer than it was 24 hours ago.

“We’ll probably only know for sure as we get closer to the 15th of December,” he concluded.

– Key figures around 1545 GMT –

London – FTSE 100: UP 0.4 percent at 7,188.50 points (close)

Frankfurt – DAX 30: UP 1.2 percent at 13,140.57 (close)

Paris – CAC 40: UP 1.3 percent at 5,799.68 (close)

EURO STOXX 50: UP 1.4 percent at 3,660.02

Tokyo – Nikkei 225: DOWN 1.1 percent at 23,135.23 (close)

Hong Kong – Hang Seng: DOWN 1.3 percent at 26,062.56 (close)

Shanghai – Composite: DOWN 0.2 percent at 2,878.12 (close)

New York – Dow: UP 0.8 percent at 27,724.95

Pound/dollar: UP at $1.3091 from $1.2995 at 2145 GMT

Euro/pound: DOWN at 84.67 pence from 85.28

Euro/dollar: FLAT at $1.1082

Dollar/yen: UP at 108.88 from 108.63 yen

Brent North Sea crude: UP 3.9 percent at $63.20 per barrel

West Texas Intermediate: UP 4.15 percent at $58.43

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