Donald Trump dials down the rhetoric to soothe market fears over global trade wars

European and US shares clawed back some of the sharp losses from earlier in the week as President Donald Trump stepped down the rhetoric of the US trade clash with China.

European stock markets, including the Ftse-100 in London, responded by advancing by over 1%. "With the Dow having lost over 600 points in response to Chinese trade reprisals, there is clearly a substantial degree of anxiety inherent within markets over the possibility that US-China trade talks return to square one," said Josh Mahony at online broker IG.

"Today’s gains are as much a reflection of the fact while both sides appear to be moving further apart, Trump’s apparent willingness to resume talks highlights that there is a chance that talks could suddenly get back on track," he said.

The US S&P 500 benchmark was still down more than 4% since the president escalated the trade war in early May.

Battered technology shares led gains as Apple and Nvidia bounced back from their biggest one-day declines since January.

Heavyweight US exporters Caterpillar and Boeing reversed around half of this week's losses.

“Investors are looking for opportunities to get into this market, and so far in 2019 there really haven’t been any 'buy the dip’ opportunities other than last week,” Ryan Nauman, market strategist at Informa Financial Intelligence, said.

“And you’re also seeing President Trump confirmed a meeting with President Xi during next month’s G-20 summit, which provides some optimism that despite the increase in tariffs, negotiations are still ongoing,” said Mr Nauman.

Signs emerged that President Trump had pressed the traded battle far enough. The president sprinkled his criticisms of China over the last 48 hours with enough signals that negotiations haven’t completely broken down that traders rushed back into the beaten down market to find bargains.

But the rally remains tenuous as the White House also announced it was prepping tariffs on the remaining $300bn (€267bn) of Chinese imports, and economists warned the new penalties will eventually weigh heavily on the American economy.

Elsewhere, oil advanced as Saudi Arabia reported drone attacks on pumping stations, throwing the supply outlook into doubt. Bitcoin strengthened past $8,000, extending its longest winning streak since 2013.

Irish Examiner and Reuters staff

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