NEW YORK: World equity markets rebounded on Friday from the previous day's sharp fall, after US President Donald Trump said complaints against China's Huawei Technologies Co Ltd might be resolved within the framework of a Sino-US trade deal.

Tensions remained high, with China accusing US Secretary of State Mike Pompeo of fabricating rumors after he said Huawei's chief executive was lying about the telecom network gear maker's ties to the Chinese government.

On Thursday, Trump said a trade deal could resolve US complaints against Huawei, but he also called the company "very dangerous."

"Today's action is mostly based on sentiment because the overall market is trading at a full valuation," Rahul Shah, CEO of Ideal Asset Management in New York, said of equities.

Investments remain highly susceptible to headline risk, Shah said, though investors took in stride a US Commerce Department report that said new orders for domestic capital goods fell more than expected in April.

The report also showed March orders were not as strong as previously thought, and shipments were weak over the last two months, further evidence that manufacturing and the US economy were slowing.

MSCI's gauge of stock performance across 47 countries gained 0.39%, while the pan-European STOXX 600 index closed up 0.56%.

Investors appeared unfazed by British Prime Minister Theresa May's resignation as Conservative party leader after failing in a final attempt to win parliamentary support for her deal to exit the European Union.

On Wall Street, the Dow Jones Industrial Average rose 95.22 points, or 0.37%, to 25,585.69. The S&P 500 gained 3.82 points, or 0.14%, to 2,826.06 and the Nasdaq Composite added 8.73 points, or 0.11%, to 7,637.01.

For the week, the Dow fell 0.68%, the S&P 500 slid 1.16% and the Nasdaq declined 2.29%.

The dollar edged off two-year highs set on Thursday, pressured as the weak US manufacturing activity data sparked worries the trade conflict with China may hurt the world's largest economy.

Against a basket of six major currencies, the dollar was down 0.29% at 97.575, well off the two-year high of 98.371 the previous session.

The euro rose 0.24% to $1.1207 while the Japanese yen strengthened 0.27% versus the greenback at 109.29.

US Treasury yields rose, as Trump's remarks about Huawei encouraged investors to book profits a day after a surge in government bond prices and ahead of a long US holiday weekend.

Benchmark 10-year US Treasury notes fell 8/32 in price to push yields up to 2.3237%.

US markets will close on Monday for Memorial Day, a federal holiday.

May's resignation briefly sent sterling fluctuating wildly, rising nearly half a percent against the dollar after the announcement and traded near those gains at $1.2714. Against the euro, sterling snapped a 14-day losing streak.

Oil prices climbed 1% but still posted their biggest weekly drop of the year, pressured by rising inventories and worries about the global economy.

US crude inventories rose to their highest since July 2017, suggesting ample supplies in the world's top consumer . Brent crude, the global benchmark, rose 93 cents to settle at $68.69 a barrel. For the week, it fell almost 5%.

US West Texas Intermediate crude traded up 72 cents to settle at $58.63. For the week WTI fell 6.5%.

Gold steadied, under pressure from the equities rebound but supported by a weaker dollar and growing expectations for a US interest rate cut.

US gold futures for June settled down 0.1% at $1,283.60 an ounce.