Stocks rally as trade dialogue trumps tariff threats

LONDON: Stock markets pushed higher across the globe on Thursday as the United States and China seemed to move towards dialogue rather than slapping new trade tariffs on each other.

Markets in Asia started off a rally after the US reached out to China for fresh talks in a bid to avert a trade war, providing some much-needed respite to weary investors.

News that Treasury Secretary Steven Mnuchin had invited top Chinese officials for talks came just under a week after Donald Trump threatened to impose tariffs on all $500 billion worth of imports from China.

The president's top economics adviser Larry Kudlow called the move a "positive thing" and added that "you could say that communication has picked up a notch".

China's commerce ministry on Thursday welcomed the offer and said the two sides were discussing details.

Hong Kong's Hang Seng Index jumped 2.5 percent, having fallen for six straight days and into a bear market, which is a 20 percent drop from its January record high.

Most other markets in the region followed it higher.

The eurozone's leading markets were also higher after the European Central Bank didn't produce any surprises at its monetary policy meeting.

London slid by 0.3 percent, penalised by a stronger pound.

On Wall Street, the Dow rose by 0.4 percent in the first minute of trading.

"US stocks are higher in early action, following a positive session in Asia and as Europe is trading mostly to the upside, aided by cooling trade worries as reports suggest the US is seeking another round of talks with China," analysts at Charles Schwab brokerage said in a client note.

- Turkish delight -

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The biggest surprise on Thursday came from Turkey's central bank, which announced a massive rate hike to battle soaring inflation and boost the lira, prompting the embattled currency to surge in value.

The central bank hiked the one week repo auction rate 625 basis points from 17.75 percent to 24 percent, significantly higher than the Bloomberg consensus of 21 percent.

The lira reacted strongly to the decision, rising by five percent in value to 6.0 lira to the US dollar. It later shed some of those gains but was still up over 2.7 percent in value at 6.17 to the dollar.

Turkey has in recent weeks been battling through one of the most troubled periods for its economy under the rule of President Recep Tayyip Erdogan, with the lira battered on currency markets in August.

It made the announcement only hours after President Recep Tayyip Erdogan called on the bank to lower interest rates.

Crude oil prices fell as Hurricane Florence weakened on its approach towards the US east coast, reducing the risk of damage and disruption to oil installations.

Traders also focused on the International Energy Agency announcing that global oil output hit a record of 100 million barrels per day in August, providing some relief from concerns about supplies as exports from Iran and Venezuela decline.

- Key figures around 1330 GMT -

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New York - Dow Jones: UP 0.4 percent at 26,110.31 points

London - FTSE 100: DOWN 0.3 percent at 7,291.99

Frankfurt - DAX 30: UP 0.5 percent at 12,087.11

Paris - CAC 40: UP 0.3 percent at 5,347.74

EURO STOXX 50: UP 0.5 percent at 3,344.22

Tokyo - Nikkei 225: UP 1.0 percent at 22,821.32 (close)

Hong Kong - Hang Seng: UP 2.5 percent at 27,014.49 (close)

Shanghai - Composite: UP 1.2 percent at 2,686.58 (close)

Euro/dollar: UP at $1.1690 from $1.1626 at 2100 GMT

Pound/dollar: UP at $1.3108 from $1.3045

Dollar/yen: UP at 111.40 yen from 111.26 yen

Oil - Brent Crude: DOWN 54 cents at $79.20 per barrel

Oil - West Texas Intermediate: DOWN 82 cents at $69.58 per barrel