TRADE TALK HOPES FEED THE BULL

london — World stocks hit their highest levels in over a week on Friday as expectations grew that the United States and China would open new trade talks, while an interest rate hike in Turkey supported the lira and global risk appetite.

The MSCI All-Country World index, which tracks shares in 47 countries, was up 0.4 per cent on the day by afternoon trade in Europe. It had earlier risen as much as half a per cent on the day, touching its highest since September 4.

Led by technology and auto stocks, the pan-European Stoxx 600 index was up 0.2 per cent, set for its best weekly gains in seven weeks. Tech stocks rose 0.4 per cent after Apple gained on Wall Street following Europe’s close on Thursday. Wall Street was set to open higher on Friday, futures indicated.

While the US central bank is expected to lift rates next month, the figures lower the chances of another such move before January — providing support to equities on Wall Street.

“Hope springs eternal for emerging markets anytime the US dollar weakens,” said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.

Hope springs eternal for emerging markets anytime the US dollar weakens Stephen Innes,

Head of Asia-Pacific trading at Oanda

There has been no fundamental change in the state of the US China trade dispute Hannah Anderson,

Global market strategist at JP Morgan Asset Management

MSCI’s broadest index of Asia Pacific shares outside Japan gained 1.2 per cent. Australian shares were up 0.6 per cent, Seoul’s Kospi rose 1.4 per cent and Hong Kong’s Hang Seng gained one per cent. Japan’s Nikkei stock index was 1.2 per cent higher. Chinese shares fell, despite a short-lived bump from data that showed forecasttopping industrial output and retail sales data for August.

China’s benchmark Shanghai Composite index was down 0.2 per cent and the blue-chip CSI300 index rose 0.2 per cent.

Chinese officials welcomed an invitation from US Treasury Secretary Steven Mnuchin to new talks. But President Donald Trump tempered market expectations, tweeting on Thursday that Washington is “under no pressure to make a deal with China” .

The Trump administration is readying a final list of $200 billion worth of Chinese imports that it plans to levy tariffs on in coming days. That move would mark an escalation in the trade war.

“While the potential for a trade deal in the near-term remains low, a resumption of dialogue could lift sentiment and support markets, in our view,” analysts at Credit Suisse wrote in a note.

Uncertainty around the global outlook for trade was highlighted by the European Central Bank, which on Thursday kept policy unchanged as expected and warned that risks from protectionism were growing.

A sharp interest rate increase by Turkey’s central bank to support a tumbling lira boosted risk appetite in emerging markets. The bank hiked its benchmark interest rate by 625 basis points, to 24 per cent. After rising as high as 6.1442 to the dollar, the lira eased to 6.1025 on Friday.

The euro hit a two-week high, extending Thursday’s gains, after comments from ECB president Mario Draghi that focused on healthy domestic fundamentals, including rapid growth in employment and a rise in wages.

The pound reached a six-week high of $1.3139, up 0.3 per cent and set for its second biggest weekly rise of 2018.

The dollar eased 0.1 per cent against the yen to 111.89 .

US crude was 0.4 per cent higher at $68.82 a barrel as Hurricane Florence approached the US east coast. Brent crude rose 0.1 per cent to $78.23 per barrel.

Spot gold gained nearly half a per cent to $1205.36 per ounce.