Focus is on Washington, where China and the US put pen to paper on their 'phase one' trade deal

New York (AFP) - World stock markets were a mixed bag on Monday as investors turned their attention to the planned signing of a China-US trade pact, with Wall Street hitting new records and European markets mostly retrenching.

London bucked the sluggish European trend thanks to a weaker pound, which boosts share prices of multinationals that earn in dollars.

Sterling sagged as Bank of England policymaker Gertjan Vlieghe hinted at a potential vote in favor of a January cut to the central bank’s main interest rate.

Stoking rate-cut speculation, official data showed the British economy shrank 0.3 percent in November, as Brexit and political uncertainty contributed to slashing manufacturing output.

Wall Street enjoyed a strong session, with both the S&P 500 and Nasdaq finishing at fresh records two days before President Donald Trump is due to sign a “phase one” agreement with Beijing.

Stocks in New York were in positive territory the whole session, gaining ground following a report that the US would formally retract its accusation that China manipulates its currency to gain unfair trade advantages.

“We enter the week with some enthusiasm at getting the phase one deal signed,” said Art Hogan, chief market strategist at National Securities, adding that investors were also hopeful that an upcoming trove of banking earnings would be good.

Earnings season begins in earnest Tuesday with reports from JPMorgan Chase and other large banks.

Companies in the S&P 500 are projected to report a 2.0 percent drop in earnings for the quarter, according to Factset.

The improved state of US-China trade relations has been a key factor in a series of Wall Street records, along with solid economic data and accommodative monetary policy.

“Provided the deal inks a commitment from China to increase agricultural products and outlines a dependable enforcement mechanism, the market will go merrily along the way,” said AxiTrader’s Stephen Innes.

Large technology companies helped lead the market, with Apple winning 2.1 percent, Facebook 1.8 percent and Netflix 3.0 percent. Tesla jumped nearly 10 percent following an upgrade from Oppenheimer.

- Key figures at 2140 GMT -

New York - Dow: UP 0.3 percent at 28,907.05 (close)

New York - S&P 500: UP 0.7 percent at 3,288.13 (close)

New York - Nasdaq: UP 1.0 percent at 9,273.93 (close)

London - FTSE 100: UP 0.4 percent at 7,617.60 (close)

Frankfurt - DAX 30: DOWN 0.2 percent at 13,451.52 (close)

Paris - CAC 40: FLAT at 6,036.14 (close)

EURO STOXX 50: DOWN 0.3 percent at 3,779.68 (close)

Hong Kong - Hang Seng: UP 1.1 percent at 28,954.94 (close)

Shanghai - Composite: UP 0.8 percent at 3,115.57 (close)

Tokyo - Nikkei 225: Closed for a public holiday

Pound/dollar: DOWN at $1.2990 from $1.3064 at 2200 GMT Friday

Euro/pound: UP at 85.72 pence from 85.13 pence

Euro/dollar: UP at $1.1136 from $1.1121

Dollar/yen: UP at 109.92 yen from 109.45 yen

Brent Crude: DOWN 1.2 percent at $64.20 per barrel

West Texas Intermediate: DOWN 1.6 percent at $58.08