LONDON: Most European equities rebounded Friday as investors bet on Beijing and Washington ending their trade war, mirroring earlier gains in Asia, but Wall Street investors seemed more sceptical of the chances for any 11th hour breakthrough.
The contrasting views reflected rattled investor nerves on the day the US doubled its tariffs on a host of Chinese goods, dealers said.
Paris and Frankfurt closed higher, while London ran into a late bout of selling to end a touch lower.
Across the Atlantic meanwhile the Dow index was down by more than 300 points in the late New York morning.
"US stocks are extending a weekly drop, which is poised to be the largest of the year, with the US following through on its threat to increase tariffs on Chinese goods as the two sides continue talks today in Washington," the Charles Schwab brokerage said.
In a brief respite from trade woes, Uber kicks off its Wall Street listing Friday with a vast share offering that values the ride-hailing giant at more than $82 billion.
US President Donald Trump has pulled the trigger on a steep increase in tariffs on Chinese goods, ramping up punitive duties on $200 billion in imports from 10 to 25 percent in a major escalation of the bitter trade war between the world's two biggest economies.
However, Russ Mould, investment director at stockbroker AJ Bell, said markets were adopting a wait-and-see approach -- and he suspected that a deal would eventually be clinched.
- 'Real facts' -
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"Investors hate uncertainty as it leads to speculation about what might and might not happen. Once they have the real facts, investors can properly assess the situation," Mould told AFP.
"I suspect that markets still believe a deal can and will be done, because both President Xi and President Trump need one," he added.
The tariffs news failed to derail markets in Asia and Europe, after Trump stated also that he had received a "beautiful letter" from China's President Xi Jinping -- and that it was "possible" to get a deal.
"Xi needs a deal to keep economic growth on the road, because the ongoing credibility and legitimacy of his tenure and the Communist Party more generally rests on jobs and prosperity," said Mould.
"Trump needs one because he seems to measure his success by where the Dow Jones Industrials is trading and because he has an election to fight in 2020.
"Winning that will be a lot harder if the US economy is slowing down or even turning down," the analyst added.
- Shanghai leads -
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In Asia, Shanghai led gains at the end of a torrid week for equities, with investors nevertheless keeping a eye on the ongoing China-US trade talks.
Both Shanghai and Hong Kong bounced back on hopes the economic superpowers will be able to reach a deal to avert a trade war that most observers warn could shatter global growth and batter markets.
But China has vowed to hit back at the tariffs hike, saying it "deeply" regretted the US move.
The tariffs came in after the first day of high-stakes negotiations in Washington between Chinese Vice Premier Liu He, US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.
- Red-hot Thyssenkrupp -
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The slightly improved sentiment provided support to higher-yielding, riskier currencies, with the yuan edging higher though it continues to wallow around four-month lows.
However, in a worrying sign, Hu Xijin, editor-in-chief of the Global Times -- which is published by the Communist Party's People's Daily -- cited a source familiar with the talks as saying there is "zero" chance of a deal before Friday.
"If it is that bad, the real suspense is whether the two sides will continue negotiations after Friday," Hu said.
In addition to a rosier view on trade talks, European markets also got a boost from strong economic data, including accelerated British economic growth, and a stronger trade surplus for Germany.
Frankfurt's Dax index outperformed its European peers largely thanks to a whopping surge in Thyssenkrupp shares which rose over 20 percent after the steel conglomerate said it was dropping its merger plans with Tata of India.
- Key figures around 1540 GMT -
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London - FTSE 100: DOWN 0.1 percent at 7,203.29 points (close)
Frankfurt - DAX 30: UP 0.7 percent at 12,059.83 (close)
Paris - CAC 40: UP 0.3 percent at 5,327.44 (close)
EURO STOXX 50: UP 0.3 percent at 3,361.05
New York - Dow: DOWN 1.2 percent at 25,515.21
Tokyo - Nikkei 225: DOWN 0.3 percent at 21,344.92 (close)
Hong Kong - Hang Seng: UP 0.8 percent at 28,550.24 (close)
Shanghai - Composite: UP 3.1 percent at 2,939.21 (close)
Euro/dollar: UP at $1.1244 from $1.1215 at 2100 GMT
Pound/dollar: UP at $1.3029 from $1.3014
Dollar/yen: DOWN at 109.61 yen from 109.74 yen
Oil - Brent Crude: UP 23 cents at $70.62 per barrel
Oil - West Texas Intermediate: UP 8 cents at $61.78