Trade war fails to dent markets rally

london — European and Asian stocks mostly rose Wednesday as new tit-for-tat tariffs by China and the United States were seen as lighter than feared, while there were hopes the two sides will avert a damaging trade war.

US President Donald Trump said this week that he would press ahead with 10 per cent levies on another $200 billion of imports, prompting Beijing to target $60 billion of US goods with five to 10 per cent taxes. The developments were a clear escalation in the monthslong standoff between the world’s top two economies.

However, analysts said the retaliation measures were not as painful as they could have been and sent European equities higher out of the gates.

“The markets managed a spir- ited open on Wednesday, despite Beijing’s tariff response to Donald Trump’s $200 billion attack on Chinese imports and the nearing of a Brexit ‘moment of truth’ in Salzburg,” said Spreadex analyst Connor Campbell. “Though China announcing tariffs on $60 billion in US imports is not great news, it is not as bad as it could have been.”

European leaders meanwhile meet Wednesday in Salzburg, Austria, for a summit to set up the last stretch of talks for a Brexit deal.

The leaders will then meet without May on Thursday to discuss the hurdles to a deal and a parallel statement on future relations with Britain, following its departure from the European Union at the end of March.

The pound meanwhile leapt on news that Britain’s annual inflation rate unexpectedly hit a six-month high in August.

Despite Wednesday’s rally, sterling has slumped since Britain’s vote in favour of Brexit more than two years ago.