World shares rise on hopes for U.S.-China breakthrough

Annabelle Liang, The Associated Press</span>
Published Thursday, February 28, 2019 11:42PM EST
Last Updated Friday, March 1, 2019 4:44AM EST

SINGAPORE -- World markets were lifted Friday by suggestions that the U.S. could endorse a trade deal with China in the coming weeks, after the country's nuclear talks with North Korea ended abruptly with no agreement.

According to Bloomberg, U.S. officials are preparing a final trade deal ahead of a summit between President Donald Trump and Chinese leader Xi Jinping, which could take place as soon as mid-March. It cited unnamed sources close to the matter.

In Europe, France's CAC 40 rose 0.6 per cent to 5,273.05 and the DAX in Germany was 0.9 per cent higher at 11,622.83. Britain's FTSE 100 picked up 0.6 per cent to 7,119.41. Wall Street was positioned for early gains, with futures for the Dow Jones Industrial Average up 0.4 per cent at 26,022.00. That for the broad S&P 500 index also advanced 0.4 per cent to 2,796.70.

Traders hope that a tariffs battle waged by the world's two largest economies would be called off if a deal is reached.

Trump and Xi agreed to a 90-day ceasefire in December after raising import taxes on billions of dollars of each other's goods. The U.S. was set to hit China with a fresh wave of tariffs once the agreement expires on Saturday.

While progress on issues like Washington's unhappiness over Beijing's technology policy has been slow, Trump said he will postpone the tariffs to give the countries more time to talk. He did not say for how long.

On Thursday, Trump's talks with North Korean leader Kim Jong Un ended two hours early because they could not agree on terms for the lifting of U.S. sanctions.

"Sometimes you have to walk," Trump said. Both sides have since promised further negotiations.

"In terms of implications for markets, this does not represent any immediate escalation either and would likely return us to a waiting game," Jingyi Pan of IG said in a market commentary.

Buying in Asia was supported by an announcement by MSCI, a leading provider of indexes and analytics. MSCI said it will quadruple the weight of Chinese A shares in its global indexes by November. It will also add more Chinese stocks to its Emerging Markets Index, giving the country's foreign inflows a much-needed boost.

A private survey also added to Chinese growth hopes. The Caixin manufacturing purchasing manager's index, which measures growth in the sector, jumped to 49.9 in February, from 48.3 in the previous month. The index is on a 100-point scale, with 50 separating contraction from growth.

This comes after China's official manufacturing PMI fell 0.3 points to 49.2 in February, a three-year low.

ASIA'S DAY: Japan's Nikkei 225 index rebounded 1 per cent to 21,602.69 and Hong Kong's Hang Seng added 0.6 per cent to 28,812.17. The Shanghai Composite index jumped 1.8 per cent to 2,994.01 and Australia's S&P ASX/200 was up 0.4 per cent at 6,192.70. Shares rose in Singapore and Indonesia but fell in Malaysia. South Korean and Taiwanese markets were closed for a holiday.

ENERGY: U.S. crude added 38 cents to $57.60 per barrel in electronic trading on the New York Mercantile Exchange. It finished 28 cents higher at $57.22 a barrel overnight. Brent crude, used to price international oils, gained 37 cents to $66.68 a barrel. The contract gave up 27 cents to $66.31 in London.

CURRENCIES: The dollar strengthened to 111.91 yen from 111.39 yen on Thursday. The euro eased to $1.1363 from $1.1371.

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