Stock markets climb as trade optimism lingers

• The pound slipped meanwhile on talk that a Bank of England rate cut is in the pipeline after the central bank downgraded its growth outlook.
• Bank directors who had met Thursday nonetheless left its main rate unchanged for now.

LONDON: Stock markets rose on Thursday, boosted once more by hopes of a China-US trade deal, with some looking to December for an accord between the two economic superpowers.

The pound slipped meanwhile on talk that a Bank of England rate cut is in the pipeline after the central bank downgraded its growth outlook.

Bank directors who had met Thursday nonetheless left its main rate unchanged for now.

The weaker pound helped lift the London stock market, but equities everywhere rose, along with oil prices, after China said it had agreed with the United States on a plan to gradually remove each other's tariffs, fuelling hopes they can resolve a trade war that has roiled the global economy.

Trade fatigue? Surely not

Broad optimism that the economic superpowers would soon complete part one of a wider agreement has been the basis of a rally in global equities for several weeks.

"What trade promise fatigue?", asked Edward Moya, an analyst with Oanda.

"Financial markets remain determined to climb higher as global equities were boosted after China's Commerce Ministry spokesman Gao Feng noted that both sides had agreed to simultaneously cancel some existing tariffs on one another's goods," he said.

European stocks were well in the black in mid-afternoon as Wall Street opened higher, helped by US weekly jobless claims coming in lower than expected.

The new appetite for risk, favouring stocks, weighed on the bond market however.

As a result, the yield on the French 10-year government bond which had gone negative in June, returned into positive territory Thursday.

'Adverse reaction'

The Bank of England's rate decision, which was not unanimous, sparked speculation that easier rates are coming, analysts said.

"Two members preferred a 25 basis point cut in bank rate at this meeting," the bank's statement said. The pair judged that "some extra stimulus was needed".

The central bank also upgraded its UK growth forecast to 1.4 percent in 2019 but downgraded 2020 guidance to 1.2 percent.

"Given the political uncertainty ahead of next month's election it is not at all surprising that the central bank has decided to refrain from any change in policy, but the calls from some members for rate cuts come as something of a surprise and has caused an adverse reaction in the pound," said David Cheetham at xtb.

Earlier Thursday, the Conservative government cancelled a planned release of its own updated economic forecasts just one hour before publication had been due.

"This will no longer go ahead as the Cabinet Secretary has concluded that this would not be consistent with the Cabinet Office's general election guidance," the Office for Budget Responsibility said in a statement.

Key figures around 1440 GMT

London - FTSE 100: UP 0.4 percent at 7,424.47 points

Frankfurt - DAX 30: UP 0.7 percent at 13,272.74

Paris - CAC 40: UP 0.3 percent at 5,882.85

EURO STOXX 50: UP 0.4 percent at 3,703.26

New York - Dow: UP 0.6 percent at 27,644.45

Tokyo - Nikkei 225: UP 0.1 percent at 23,330.32 (close)

Hong Kong - Hang Seng: UP 0.6 percent at 27,847.23 (close)

Shanghai - Composite: FLAT at 2,978.71 (close)

Pound/dollar: DOWN at $1.2816 from $1.2855 at 2100 GMT

Euro/pound: UP at 86.32 pence from 86.09 pence

Euro/dollar: DOWN at $1.1063 from $1.1066

Dollar/yen: UP at 109.18 yen from 108.98 yen

Brent North Sea crude: UP 1.1 percent at $62.43 per barrel

West Texas Intermediate: UP 1.8 percent at $57.34 per barrel