European shares touched a record high after Phil Hogan, the EU trade commissioner, struck a positive tone on talks with Washington, soothing some concerns over a possible escalation in trade tensions between the cross-Atlantic allies.
The pan Stoxx-600 index rose as much as 0.8% to a record high of 423.80, and was set to mark its best week since late-December.
Each of the main European exchanges were up by around 1%.
Mr Hogan said he had a good exchange of views with US trade representative Robert Lighthizer in Washington, under-scoring Brussels’ desire to negotiate solutions for several open trade disputes
between the US and the EU.
The meeting is a step forward in addressing long-standing issues such as a French digital tax and aircraft subsidies. It also added to investor optimism after the US and China signed an interim trade deal earlier in the week.
“The positive comments surrounding one of the United States’ other trade conflicts — with the EU — it just adds to the overall feeling of relief,” said Connor Campbell, analyst at British financial spread better Spreadex. Mr Campbell also said signs of improvement in the Chinese economy following an in-line GDP figure and strong industrial production data was helping risk appetite, with demand in the world’s second-largest economy looking to pick up in 2020.
However, a more comprehensive trade deal between the US and China is unlikely, a global trade expert said, adding that the recently-agreed phase one deal lacks teeth and is too ambitious
in its scope.
Chris Rogers, research analyst at S&P Global Market Intelligence’s supply chain analysis group Panjiva, said the countries will find it tough to address the core issue of the long-standing trade dispute — state support of enterprise in China.
In the near term, the US may re-examine trade ties with other Asian countries as the presidential election nears, Mr Rogers said.
Data showed that China’s economic growth cooled to its weakest in nearly 30 years in 2019 at 6.1%, amid the bruising trade war with the US. But figures also showed the world’s second-largest economy ended the rough year on a somewhat firmer note as the trade truce revived business confidence and earlier growth boosting measures finally appeared to be taking hold.
Meanwhile, France has warned the US retaliation will come fast if Washington puts more tariffs on French products and escalates the digital tax dispute between the two countries.
But French finance minister Bruno Le Maire also said that he sees a possible compromise with the Americans that avoids a broader transatlantic trade war.
Mr Hogan said US president Donald Trump was “obsessed” with the goods trade deficit between the US and the EU as he focuses on re-election in November.
Transatlantic trade in goods and services is worth more than $3bn a day, according to Mr Hogan.
“Sounds like a fairly healthy relationship to me,” he said. “So why put tariffs on these EU products to make them more expensive for your people?”
Mr Le Maire and US treasury secretary Steven Mnuchin are due to meet next week on the sidelines of the World Economic Forum in Davos.