Donald Trump warned he would hike tariffs on more Chinese goods if Xi Jinping did not attend a meeting with him at the G20 this month

New York (AFP) - Global stocks mostly rose Tuesday with the prospect of a US interest rate cut and broader central bank dovishness helping to offset lingering US-China trade war tensions.

Bourses in Paris, Frankfurt and London all rose, along with Tokyo, Hong Kong and Shanghai.

But Wall Street finished slightly lower, with the Dow’s six-session winning streak ending.

“The market was exhausted,” said Nate Thooft, senior portfolio manager of Manulife Asset Management. “It’s digesting gains.”

Investors have welcomed the recent shift in tone from Federal Reserve officials, who have hinted at a possible interest rate hike in the coming months if growth weakens due to trade conflict.

Other central bankers have also adopted a dovish slant. The European Central Bank last week extended for six months a period of ultra-low interest rates, while Brexit uncertainty has reduced expectations of a rate hike from the Bank of England any time soon.

“Safe to say, the changing expectations for interest rates is the primary reason for such a strong rebound in the (stock) markets that didn’t look particularly likely at the start of last week,” said Oanda senior market analyst Craig Erlam.

“Once again, it’s central banks that are left to fill the economic void, easing investor fears over trade wars and a global slowdown.”

Friday’s weak US jobs report increased expectations that the Fed would look to cut interest rates, a possibility that also looked more likely following modest inflation data Tuesday.

Still, investors are closely eyeing trade conflicts, especially the lingering fight between Beijing and Washington.

Commerce Secretary Wilbur Ross said Tuesday that the Group of 20 summit later this month could lead to progress towards a trade deal with China but is not the venue for a “definitive agreement.”

Talks between Washington and Beijing broke down last month after Trump accused China of reneging on commitments and after the United States took aim against China’s tech behemoth Huawei.

The impasse has raised hopes that, on the sidelines of the G20 leaders’ summit, Xi and Trump might jumpstart efforts at resolving the impasse. However, Ross tamped down expectations for a final agreement, which he said “is going to be thousands of pages.”

“At the G20, at most, it will be… some sort of agreement on a path forward,” Ross told CNBC. “It’s certainly not going to be a definitive agreement.”

But Ross said there eventually will be a deal.

“Even shooting wars end in negotiation.”

- Key figures around 2040 GMT -

New York - Dow: DOWN 0.1 percent at 26,048.51 (close)

New York - S&P 500: DOWN less than 0.1 percent at 2,885.72 (close)

New York - Nasdaq: FLAT at 7,822.57 (close)

London - FTSE 100: UP 0.3 percent at 7,398.45 (close)

Frankfurt - DAX 30: UP 0.9 percent at 12,155.81 (close)

Paris - CAC 40: UP 0.5 percent at 5,408.45 (close)

EURO STOXX 50: UP 0.4 percent at 3,401.10 (close)

Tokyo - Nikkei 225: UP 0.3 percent at 21,204.28 (close)

Hong Kong - Hang Seng: Up 0.8 percent at 27,789.34 (close)

Shanghai - Composite: UP 2.6 percent at 2,925.72 (close)

Euro/dollar: UP at $1.1328 from $1.1312 at 2100 GMT Monday

Pound/dollar: UP at $1.2723 from $1.2685

Dollar/yen: UP at 108.51 yen from 108.45 yen

Oil - Brent North Sea: FLAT at $62.29 per barrel

Oil - West Texas Intermediate: UP 1 cent at $53.27 per barrel

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