European stocks rallied — leaving the market set for its biggest weekly rise since 2016 — after big gains in China’s stock market prompted by signs of easing in Sino-American tension.
The broad Stoxx 600 index gained 1.2 per cent in early trade, leaving it up 4.2 per cent on the week. It had dropped 5.6 per cent in October in its worst showing in more than two-and-a-half years.
On Friday, Germany’s Xetra Dax rose 1.5 per cent, France’s CAC 40 added 1.4 per cent and the FTSE 100 advanced 1.1 per cent.
The gains follow a 3.6 per cent jump in the CSI 300 index, a gauge of stocks traded on China’s mainland, and a 3.7 per cent rise for Hong Kong’s Hang Seng. The latter is on track to post its best week since April 2015. MSCI’s measure of Asian developed and emerging market stocks, excluding Japan, rose 2.9 per cent.
Investors assumed a more upbeat attitude following global stock markets’ worst month since 2012, after US President Donald Trump said trade negotiations with his Chinese counterpart, Xi Jinping, were “moving along nicely”.
Concerns over a trade battle between the world’s two biggest economies have provided a persistent point of angst for money managers and have hit sentiment among business leaders across many major global economies.
Robert Carnell, head of Asia-Pacific research at ING, said he remained “sceptical” about the apparent warming in relations between Messrs Trump and Xi.
“US growth data remains strong, so the administration there doesn’t need to make the first move,” he said. “And while Chinese growth indicators have looked far more worrying, I can’t see China moving sufficiently on issues like intellectual property to satisfy the US.”