LONDON: Most Asian and European stock markets rose on Friday as traders overcame jitters about China-US trade talks that were fuelled by a report saying Beijing officials had raised doubts about the chances of a long-term deal.
Attention now turns to the release later in the day of US non-farm payrolls (NFP) figures, which will give clues about the state of the US economy.
The key data come days after the Federal Reserve cut interest rates for a third straight month but hinted it would not likely do so again this year as it assesses the growth outlook.
"The NFP report caps off another chaotic week in the markets," said Oanda analyst Craig Erlam, adding markets had fallen Thursday after "China cast doubt over a comprehensive trade deal with the US".
Investors were spooked by a speech by Secretary of State Mike Pompeo, in which he called China "truly hostile" to the US, leading Beijing to accuse the White House of "viciously" attacking it.
The flare-up comes just as the two sides put the finishing touches to a mini trade pact that is seen as the first phase of a wider agreement, with top-level phone talks due to take place later Friday.
Recent signs of progress in the long-running dispute have provided some much-needed support to equity markets in recent weeks, with most markets posting some healthy gains.
Wall Street, where the S&P 500 had hit a record high Wednesday, turned lower after Bloomberg News reported that Chinese officials were sceptical they would be able to reach a comprehensive long-term deal.
It said they warned they would not budge on key issues, while they were also concerned about Donald Trump's impulsiveness and were even worried about the chances of getting the current agreement finished.
"The article proved a not-too-subtle reminder of how quickly trade war sentiment can pivot and highlighting those fears that we all knew about but were perhaps was too wrapped up (in) the phase one euphoria to recognise," said AxiTrader's Stephen Innes.
Also Thursday, Pompeo hit out at China's clampdown on Hong Kong protests and its incarceration of Uighur Muslims, and said Beijing was seeking international domination. China responded by accusing the US of "arrogance and fear".
Still, after an early sell-off, Asian traders took the developments in their stride and the mood picked up through the day to give the region's equity markets a healthy end to the week.
Shanghai jumped one percent after a private gauge of Chinese manufacturing activity showed an improvement, soothing worries about Thursday's official reading that pointed to further contraction in the sector.
Hong Kong rose 0.7 percent to its highest close since mid-September as dealers brushed off a much-sharper-than-expected dive in third-quarter economic growth caused by the trade war and months of sometimes-violent protests that have hammered its tourism and retail sectors.
London - FTSE 100: UP 0.4 percent at 7,280.11 points
Frankfurt - DAX 30: UP 0.4 percent at 12,920.59
Paris - CAC 40: UP 0.4 percent at 5,751.79
EURO STOXX 50: UP 0.3 percent at 3,614.29
Tokyo - Nikkei 225: DOWN 0.3 percent at 22,850.77 (close)
Hong Kong - Hang Seng: UP 0.7 percent at 27,100.76 (close)
Shanghai - Composite: UP 1.0 percent at 2,958.20 (close)
New York - Dow: DOWN 0.5 percent at 27.046.23 (close)
Pound/dollar: UP at $1.2962 from $1.2942 at 2100 GMT
Euro/pound: DOWN at 86.07 pence from 86.17 pence
Euro/dollar: UP at $1.1158 from $1.1152
Dollar/yen: DOWN at 108.00 yen from 108.03 yen
Brent North Sea crude: UP 0.3 percent at $59.79 per barrel
West Texas Intermediate: UP 0.5 percent at $54.45