Stocks soar as Chinese cut tariffs on US goods

STOCKS around the world climbed as the latest breakthrough in the US-China trade war and hopes a vaccine could be around the corner for the coronavirus boosted optimism on trading floors.

Markets in the US and Europe touched record highs after Chinese authorities announced plans to halve tariffs on some £58bn worth of US imports from February 14.

It will slash the rate for items including pork, fish and soybeans from 10pc to 5pc, and the tariffs levied on items such as car parts from 5pc to 2.5pc.

The tariffs were imposed last year during a brutal spat between the world’s two largest economies and are being relaxed after a ‘phase one’ trade deal was agreed earlier this year.

It comes as hopes mount that a vaccine could be produced to stem the coronavirus outbreak, which has killed more than 560 and infected more than 28,000.

AJ Bell investment director Russ Mould said: ‘While China continues to be stricken by the coronavirus, signs of de-escalation in its trade war with the US could be more relevant to the markets in the long term – particularly if reports of a potential vaccine for the outbreak prove accurate.’

Over on Wall Street, the S&P 500 and Dow Jones hit record highs at the open when they rose 0.3pc.

The pan-European Stoxx 600 index rose 0.3pc and hit an alltime high of 426.7 in early trading.

The reaction was more muted on London’s two leading indexes – though the FTSE 100 (up 0.3pc, or 22.31 points, to 7504.79) and

FTSE 250 (also up 0.25pc, or 52.86 points, to 21572.86) both closed higher. Insurer Beazley was the top performer on the FTSE 350, climbing 8.2pc, or 44p, to 579p after it said prices for the type of commercial insurance it specialises in rose 6pc last year.

That increase indicates the market is moving on from a difficult few years that have seen a surge in large claims, many of which were driven by natural disasters in the US and Asia.

It will also have helped that Beazley’s annual profits rocketed 250pc higher to £207m.

Drax Group climbed 2.8pc, or 8p, to 298.8p after Norway’s oil fund, the Government Pension Global Fund, decided to lift its restriction on investing in the mid-cap power company.

Norges Bank, which manages the fund, said it was because Drax now bases less than 30pc of its operations on coal after a huge restructuring since 2016, when it was blacklisted. Shares in homeware retailer

Dunelm edged up 0.6pc, or 7p, to 1213p as it inked a year-long deal to sponsor the award-winning Channel 4 dating series First

Dates. Blue-chip caterer Compass

Group, meanwhile, was also in favour with traders after it said a cost-cutting drive and more contract wins in North America had offset slower business in Europe.

Compass’s shares climbed 2.7pc, or 51.5p, to 1958p on the back of the update, which was released to coincide with its annual meeting.

Sweetener maker Tate & L yle dipped 1.6pc, or 12.8p, to 788.4p, as investors were left nonplussed by a trading update where it kept full-year guidance the same and said its performance between October and December was ‘consistent’ with the first half. A more bullish update from On

the Beach, released ahead of its AGM, was better received by the market as it said it was ready to fill the void left by Thomas Cook.

It has more than doubled its spending on so-called ‘offline marketing’ such as adverts and billboards to lure in customers – and it expects to see that pay off in the second part of the year.

Shares jumped 6.7pc, or 27p, to 432p last night.