Investors are keeping an close eye on the progress of China-US trade talks

London (AFP) - Stock markets mostly retreated Friday on profit-taking at the end of a largely positive week for equities thanks to US-China trade talk hopes.

News that Beijing had agreed a deal with Washington to start removing tariffs should negotiations progress fired Wall Street to fresh record highs on Thursday.

The announcement has fanned hopes that the world’s economic superpowers – who are currently finalising a mini trade pact as part of a wider deal – can resolve their long-running tariffs war that has hobbled the global growth outlook.

“A note of caution needs to be exercised here, as we have been here before, only to find that both sides have stepped back due to concerns that they may be perceived as having given too much away,” said Michael Hewson, chief market analyst at CMC Markets UK.

Nevertheless, the latest development eased worries about the negotiations caused by reports that a hoped-for signing ceremony this month between US Presdient Donald Trump and his Chinese counterpart Xi Jinping could be delayed until December.

“The elevation of discussion from a trade truce to a possible tariff rollback is important and suggests both China and the US have come under pressure to seal a deal,” National Australia Bank’s Tapas Strickland said in a note to clients Friday.

White House spokeswoman Stephanie Grisham told the Fox News Channel: “I cannot get ahead of the talks with China, but we are very, very optimistic that we will reach a deal soon.”

However, a report said there was some opposition within the administration to such a move.

And Trump trade adviser and China hawk Peter Navarro told Fox Business “there is no agreement at this time to remove any of the existing tariffs as a condition of the phase one deal. The only person who can make that decision is Donald Trump”.

Neil Wilson, chief market analyst at Markets.com, said: “There a strong sense of the ‘if’ about this. If a first phase trade deal is done, there is agreement to roll back some existing tariffs, but only if the deal is agreed. Usual story – mixed reports really all just noise.”

Around 1130 GMT, London’s benchmark FTSE 100 stocks index was down 0.2 percent.

Earlier in Asia, Hong Kong closed down 0.7 percent following a six-day advance, while dealers in the city were bracing for a fresh weekend of protests after the death of a student who sustained head injuries when he fell during clashes with police.

Shanghai gave up 0.5 percent after data showed Chinese exports and imports fell again last month, though not as quickly as expected.

In New York meanwhile, “the major stock indices have hit repeated new all-time highs… this week amid growing optimism that the US and China are getting closer to agreeing a ‘phase one’ trade deal, which could then pave the way for a full agreement at some point in the not-too-distant future”, said Forex.com analyst Fawad Razaqzada.

- Key figures around 1130 GMT -

London - FTSE 100: DOWN 0.2 percent at 7,393.12 points

Frankfurt - DAX 30: DOWN 0.1 percent at 13,272.96

Paris - CAC 40: DOWN 0.1 percent at 5,885.54

EURO STOXX 50: FLAT at 3,705.64

Tokyo - Nikkei 225: UP 0.3 percent at 23,391.87 (close)

Hong Kong - Hang Seng: DOWN 0.7 percent at 27,651.14 (close)

Shanghai - Composite: DOWN 0.5 percent at 2,964.18 (close)

New York - Dow: UP 0.7 percent at 27,674.80 (close)

Euro/dollar: DOWN at $1.1032 from $1.1050 at 2100 GMT

Dollar/yen: UP at 109.39 yen from 109.28 yen

Pound/dollar: DOWN at $1.2799 from $1.2817

Euro/pound: UNCHANGED at 86.22 pence

Brent North Sea crude: DOWN 1.8 percent at $61.18 per barrel

West Texas Intermediate: DOWN 1.8 percent at $56.12 per barrel

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