World shares rally as Trump trade war fears ease

Stock market values are climbing worldwide amid evidence the US and China are working behind the scenes to avoid a damaging trade war.

A series of pressures combined last week to put pressure on values, with tech stocks worst hit as Facebook (NasdaqGS: FB - news) came under fire over data protection and Donald Trump threatened additional tariffs on Beijing over claims of intellectual property theft.

The stock market rally began in the US.

Analysts said Wall Street enjoyed its best day for two-and-a-half years by the close on Monday - with the Dow Jones Industrial Average recording its third-largest points gain on record. It shot up by 669 points - almost 3%.

The tech-heavy Nasdaq (Frankfurt: 813516 - news) was 3.3% up. It could have been so much better for Facebook but for news of a US regulatory investigation into the user data scandal which limited its gains to just 0.4%.

Asian markets then followed the US lead.

The gains were put down to an apparent softening in the language being used by US and Chinese officials as trade talks continued aimed at avoiding tit-for-tat tariffs.

US sources told the Reuters news agency that White House officials were asking China to cut tariffs on imported cars, allow foreign majority ownership of financial services firms and buy more US-made semiconductors.

Chinese Premier Li Keqiang pledged to ease access for American businesses amid the diplomatic effort to stop the world's two-largest economies falling out.

Analysts at JPMorgan (LSE: JPIU.L - news) wrote: "The recent escalation may have simply been a negotiating tactic that will end in a compromise.

"This would be consistent with the pattern around the steel/aluminium tariffs and is the interpretation that many market commentators are favouring," they said.

Gains were, however, tempered by continuing tensions with Russia over the Salisbury poisoning as the US joined an international expulsion of Moscow's diplomats .

The FTSE 100 bounced back from its lowest level in more than a year, rising 140 points, or 2%, to climb above the 7,000-mark on Tuesday.

But it failed to hold onto all the gains, sinking back to below 7,000 at the close - though it was still 1.6% up on the day.

The FTSE had fallen to values not seen since 2016 over the past week, dragged lower as the pound has recovered value on apparent Brexit deal progress and growing expectations of an interest rate rise in May, despite comparatively weak economic growth.

A higher pound tends to hurt the FTSE 100 as most of its constituents earn a majority of their revenue overseas.