Shares hold up well despite unresolved trade war woes

European stock markets held up well even as the US-China trade spat remained unresolved, but sterling continued to reflect fears of a hard Brexit.

"The problem for markets is that trade wars have gone quiet, but not away," said Chris Beauchamp at online broker IG.

"Getting a deal with China is a more difficult problem entirely compared to bullying Mexico. Despite the bluster, there is little sign that progress has really been made, and thus investors will be vulnerable to a return of this problem," he said.

Meanwhile, sterling traded at 88.91 pence agianst the euro, reflecting the view that the risk of Britain crashing out of the EU without a transition deal at Halloween although unlikely is still a possibility.

President Donald Trump said he’s personally holding up a trade deal with China and that he won’t complete the agreement unless Beijing returns to terms negotiated earlier in the year.

“It’s me right now that’s holding up the deal,” President Trump said. “And we’re going to either do a great deal with China or we’re not going to do a deal at all,” he said.

Last month, the US accused China of reneging on provisions of a tentative trade deal, bringing talks to a halt.

“We had a deal with China and unless they go back to that deal I have no interest,” the president said.

President Trump’s comments came a day after he threatened to raise tariffs on China if President Xi Jinping doesn’t meet with him at the upcoming Group of 20 summit in Japan.

President Trump told reporters that he could impose tariffs of 25% or “much higher than 25%” on $300bn (€265bn) in Chinese goods.

In Beijing, a foreign ministry official demurred.

"We have noted that the US publicly stated many times that it looks forward to arranging a meeting between the Chinese and US presidents on the sidelines of the G-20 summit. If we have this information we will release it in due time,” spokesman Geng Shuang said.

President Trump said again that he expects to meet with President Xi at the summit later this month.

The G-20 in late June is one of the last chances for presidents Trump and Xi to head off a conflict between the world’s biggest economies that appears to be worsening by the day.

Besides tit-for-tat tariff increases, the US has blacklisted Huawei Technologies and threatened other major Chinese tech companies, while Beijing is drawing up a list of “unreliable entities” that could face restrictions.

- Additional reporting Bloomberg