LONDON: Stock markets gained ground in Europe and the US on Monday while oil also saw a slight recovery and foreign exchange traders took an interest in yen as trade tensions intensified.
The British pound gained against the dollar despite data that showed UK manufacturing contracted for the first time in three years as Brexit stockpiling dried up.
Analysts said stocks were getting some support from buying in response to the May pullback when major indices fell almost seven percent.
"If the stock market has anything going for it as it begins the month of June, it could be the burgeoning sense that investor pessimism is rising and that the market is appearing oversold on a short-term basis," remarked analyst Patrick O'Hare at Briefing.com.
US President Donald Trump's abrupt threat last week to hit Mexico with tariffs over immigration concerns had done little to reassure investors already anxious about the increasingly fractious US-China trade war.
Trump, who began a state visit to Britain on Monday, has followed up the threats against Mexico with an announcement that Washington would no longer offer preferential trade treatment to India, effective Wednesday, in a bid to pressure New Delhi to increase market access for US goods.
Beijing's imposition of duties on $60 billion worth of US goods meanwhile took effect Saturday.
The move, which came in retaliation for Washington raising its tariffs on $200 billion in Chinese goods, is the latest round in a bruising battle between the two superpowers.
Referring to "the never-ending game of tariff tag", OANDA senior market analyst Edward Moya said there were fears "we could see a global recession by the middle of next year if the US imposes additional tariffs on China and Mexico".
As US-China talks have stalled, the dispute has spread beyond trade, with the US targeting Chinese tech giant Huawei over national security concerns, and Beijing threatening to also single out "unreliable" foreign companies.
In a sign of its unwillingness to cede too much ground, Chinese defence minister General Wei Fenghe on Sunday said that "if the US wants to talk, we will keep the door open. If they want to fight, we are ready".
There are still hopes however that Trump and Chinese President Xi Jinping will meet during the G20 summit this month to jumpstart negotiations.
Trump's trade wars have also sent oil markets plunging, but crude prices rebounded slightly on Monday after Saudi energy minister Khalid Al-Falih told Arab News in an interview: "We will do what is needed to sustain market stability beyond June.
"To me, that means drawing down inventories from their currently elevated levels."
Oil prices fell sharply last week as the outlook for global growth darkened.
Elsewhere on Monday, the IHS Markit/CIPS UK manufacturing purchasing managers' index showed a reading of 49.4 last month, down from 53.1 in April.
The figure slid below 50 -- therefore indicating contraction -- for the first time since July 2016.
"The upshot is that as most of impact of the no-deal Brexit preparations in March appear to have now unwound, we don't expect May's large fall to be repeated in June," commented Thomas Pugh, UK economist at Capital Economics.
- Key figures around 1430 GMT -
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London - FTSE 100: UP 0.3 percent at 7,181.40 points
Frankfurt - DAX 30: UP 0.3 percent at 11,759.82
Paris - CAC 40: UP 0.5 percent at 5,230.98
EURO STOXX 50: UP 0.4 percent at 3,292.99
Tokyo - Nikkei 225: DOWN 0.9 percent at 20,410.88 (close)
Hong Kong - Hang Seng: FLAT at 26,893.86 (close)
Shanghai - Composite: DOWN 0.3 percent at 2,890.08 (close)
New York - Dow: UP 0.3 percent at 24,895.20
Pound/dollar: UP at $1.2650 from $1.2629 at 2100 GMT Friday
Euro/pound: UP at 88.62 pence from 88.41 pence
Euro/dollar: UP at $1.1204 at $1.1167
Dollar/yen: DOWN at 108.34 yen from 108.35 yen
Oil - Brent Crude: UP 46 cents at $62.45 per barrel
Oil - West Texas Intermediate: UP 67 cents at $54.17 per barrel
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