World stocks rise, shrugging off trade fears

LONDON: Stock markets advanced Thursday as investors, getting a grip on lingering fears of a deepening trade war between the US and China, went bargain-hunting with gusto, dealers said.

Key European markets were well in positive territory by the close, although London was held back by a strong pound.

Wall Street also looked bullish approaching midday in New York, with both the Dow and the S&P 500 indices in record territory.

"The absence of negative news has promoted buying," said David Madden, a market analyst at CMC Markets UK.

- 'Dust has settled' -

"The dust has settled in the wake of tariffs being announced, and investors are happy to swoop in and snap up stocks," he said.

While "global trade uneasiness" -- as analysts at the Charles Schwab brokerage put it -- is currently contained, the markets' resilience may well be short-lived, some analysts predicted.

Joshua Mahony at IG detected a "hesitant tone" on trading floors. "The fears over US-China trade are likely to persist for some time yet," he said.

Emerging market currencies held their own after Beijing pledged not to weaponise the yuan in its trade standoff with the United States.

Markets had already been on the rise this week after the latest tit-for-tat tariffs from China and the US were considered lenient, and seemed to allow for talks, with observers suggesting that any further escalation was unlikely in the near term.

And while China on Wednesday hit back at US President Donald Trump's accusation that it is using the trade conflict to affect November's key mid-term elections, the generally upbeat sentiment continued in Asia and Europe on Thursday.

- 'Encouraging' -

Emerging market (EM) currencies enjoyed some much-needed buying support, having been beaten down by trade war fears in recent months, as well as concerns of a spillover from crises in Argentina, South Africa and Turkey.

Analysts said that as well as the easing trade tensions, a key boost for the currencies was Premier Li Keqiang's statement that China would not devalue the yuan to fend off the effects of any tariffs.

"China will never rely on the depreciation of the renminbi (yuan) to stimulate exports, because a one-way depreciation of the renminbi exchange rate will have more disadvantages than advantages," he told an economic forum.

"The premier's comments are encouraging as they indicate that China won't actively use its currency as a weapon in its trade scuffle with the US," said Rodrigo Catril, senior forex strategist at National Australia Bank.

However, he added: "As we have seen in recent months this doesn't necessarily mean that China will prevent the yuan from weakening if market forces push the currency lower."

Back in Europe meanwhile, the Organisation for Economic Cooperation and Development warned that ongoing trade tensions were likely to slow down global economic expansion.

Cutting its previous forecast for global growth, the OECD said that "a further rise in trade tensions would have significant adverse effects on global investment, jobs and living standards".

The warning was echoed a few hours later by the International Monetary Fund which said worsening trade tensions were likely to exact a "significant economic cost" to the world economy.

- Key figures around 1540 GMT -

New York - Dow Jones: UP 0.9 percent at 26,642.42

London - FTSE 100: UP 0.5 percent at 7,367.32 points (close)

Frankfurt - DAX 30: UP 0.9 percent at 12,326.48 (close)

Paris - CAC 40: UP 1.1 percent at 5,451.59 (close)

EURO STOXX 50: UP 1.0 percent at 3,403.12

Tokyo - Nikkei 225: FLAT at 23,674.93 (close)

Hong Kong - Hang Seng: UP 0.3 percent at 27,477.67 (close)

Shanghai - Composite: DOWN 0.1 percent at 2,729.24 (close)

Euro/dollar: UP at $1.1750 from $1.1673 at 2100 GMT

Pound/dollar: UP at $1.3242 from $1.3144

Dollar/yen: UP at 112.49 yen from 112.28 yen

Oil - Brent Crude: DOWN 69 cents at $78.71 per barrel

Oil - West Texas Intermediate: DOWN 37 cents at $70.40