The FTSE 100 soared to a two-month high as European stocks rallied as G20 summit talks between President Donald Trump and Chinese premier Xi Jinping appeared to offer signs of progress.
Trump said negotiations to end the economic dispute are “right back on track” after pledging to pause any new tariffs on Chinese goods in the ongoing US-China trade war.
Xi called for “cooperation and dialogue” as markets lifted on the apparent thawing of what have been very frosty relations between the two world powers.
The FTSE 100 rose almost one per cent higher to 7,495 points after climbing as high as 7,513 in early morning trading today.
That is its highest level since it reached 7,523 points on 23 April.
Germany’s Dax soared 1.62 per cent higher to 12,599 points and France’s Cac climbed one per cent to 5,594 points.
Meanwhile the Stoxx 600 stood 0.9 per cent up.
That came after an overnight surge in Asian stocks, which saw Japan’s Nikkei 225 rise 2.1 per cent to 21,729 points to a two-month high.
However, Hong Kong’s Hang Seng index fell 0.3 per cent to 28,542 points.
After his G20 sidebar with Xi, Trump told the press: “We will continue to negotiate, and I promise that at least for the time being we won’t be adding additional [tariffs].
“We’re going to work with China to see if we can make a deal. China will consult with us and will be buying a tremendous amount of food and agricultural products, and they’re going to start doing that almost immediately.”
He also agreed to allow US companies to conduct some trade with Huawei again, sparking US anger considering the spying claims made against the Chinese technology giant.
Connor Campbell, a financial analyst at Spreadex, said the temporary truce in the ongoing trade war had given the FTSE 100 a “flying start” to July.
“Maybe the biggest surprise was that the Trump administration is now allowing US companies to trade with Huawei once again – though the tech firm isn’t off the Entity List just yet,” he said.
“The move has caused controversy in the US, where they are still a lot of security concerns surrounding Huawei, with people not happy that those worries have been set aside so the company could instead be used as a political pawn.”
Trump had threatened to extend tariffs to $300bn of Chinese imports had the G20 talks gone badly for the US, meaning almost all Chinese goods sent to the US would have faced extra taxes.
Trump has already hiked tariffs on $200bn of Chinese imports from 10 per cent to 25 per cent, prompting China to retaliate.
Konstantinos Anthis, head of research at forex broker ADSS, said: “Finally, equities are driving higher in Asia this morning with investors breathing a sigh of relief as a breakdown in trade relations at the highest level would have been a disaster.
“Nevertheless, the fact that Trump and Xi agreed on a truce for now allows for optimism to grow and explains why equity futures on either side of the Atlantic are also suggesting a strongly positive opening bell.”