I'm picking up good trade vibrations

London (AFP) - Stock markets rallied Friday as hopes resurfaced that China and the United States could quickly strike a mini trade deal, pending a broader agreement later, dealers said.

“Markets appear to have found some sense of positivity in a week that has seen its fair share of pessimism over the growing feeling the trade talks may have ground to a standstill”, said Joshua Mahony, senior market analyst at IG trading group.

Optimism returned to trading floors after a report said China’s point man on the US tariffs talks had offered to host a meeting to help push through their crucial mini pact.

At the same time, investors were nervous that the deal could collapse at any minute after US lawmakers passed a bill supporting Hong Kong rights, causing anger in Beijing.

- ‘Not afraid’ -

Chinese President Xi Jinping on Friday said that China wants to reach an initial trade deal with the United States but is “not afraid” to fight back when necessary and will enact economic reforms at its own pace.

The world’s two biggest economies have been locked in a bruising trade conflict for more than a year, hitting each other with volleys of tariffs on hundreds of billions of dollars worth of goods.

On Thursday, the Wall Street Journal said top negotiator Vice Premier Liu He had invited US counterparts for further discussions to haul the deal over the line.

London was the standout equity performer in Europe on Friday, rising well over one percent, while Frankfurt and Paris advanced more modestly as they had to absorb a sobering set of data showing the eurozone’s economy has almost stalled after successive months of manufacturing decline.

IHS Markit said its composite eurozone purchasing managers’ index (PMI) fell to 50.3 points in November, down from a revised 50.6 points last month.

- ‘More support’ -

Wall Street was stronger in midday trading after three weak sessions.

There are fears that the US bill supporting Hong Kong rights could hurt trade talks

The pound slid meanwhile – boosting the London stock market that is dominated by multinationals earning in dollars – as separate IHS Markit PMI figures revealed that UK manufacturing and services output contracted at the fastest rates in 40 months.

In Frankfurt, Christine Lagarde urged European countries to “innovate and invest” more to support growth amid global uncertainty, in her first major policy speech as president of the European Central Bank.

The eurozone economy is expected to grow by just 1.1 percent this year, she said, “much lower than previously forecast” as “trade tensions and geopolitical uncertainties” take their toll.

- Key figures around 1645 GMT -

London - FTSE 100: UP 1.2 percent at 7,326.81 points (close)

Frankfurt - DAX 30: UP 0.2 percent at 13,163.88 (close)

Paris - CAC 40: UP 0.2 percent at 5,893.13 (close)

EURO STOXX 50: UP 0.2 percent at 3,687.32

New York - Dow: UP 0.3 percent at 27,836.22

Tokyo - Nikkei 225: UP 0.3 percent at 23,122.88 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 26,595.08 (close)

Shanghai - Composite: DOWN 0.6 percent at 2,885.29 (close)

Euro/dollar: DOWN at $1.1032 from $1.1059 at 2100 GMT

Pound/dollar: DOWN at $1.2829 from $1.2914

Euro/pound: UP at 85.97 pence from 85.64 pence

Dollar/yen: UP at 108.67 yen from 108.63 yen

Brent North Sea crude: DOWN 0.7 percent at $63.32 per barrel

West Texas Intermediate: DOWN 0.8 percent at $57.76