Sentiment was buoyed by the start of trade talks Thursday and U.S. President Donald Trump's plan to meet Beijing's envoy Friday. Economists say a final settlement to the sprawling dispute is unlikely this year, but some traders are hoping for a cease-fire on further tariff hikes or other issues.
Markets have soared and fallen during 12 previous rounds of talks that produced no progress toward ending the costly fight over Beijing's trade surplus and technology ambitions. "It looks like investors are positioning themselves for a potentially favorable outcome," said Fawad Razaqzada of Forex.com in a report. "Are investors setting themselves up for disappointment?"
In Europe, Germany's DAX added 1.7% to 12,375 and France's CAC 40 advanced 0.9% to 5,618. London's FTSE 100 rebounded from early losses, gaining 0.4% to 7,215, after the European Union said talks with the U.K. to find an amicable divorce deal were back on track, despite significant challenges to overcome before a looming Oct. 31 deadline. The pound rose to its highest level in nearly a month.
On Wall Street, the futures for the Standard & Poor's 500 Index and Dow Jones Industrial Average both rose 1%. In Asia, the Shanghai Composite Index rose 0.9% to 2,973.66 and Tokyo's Nikkei 225 gained 1.2% to 21,798.87. Hong Kong's Hang Seng advanced 2.4% to 26,320.72.
Seoul's Kospi rose 0.8% to 2,044.61 and Sydney's S&P-ASX 200 added 0.9% to 6,606.80. India's Sensex climbed 0.4% to 39,020.40 and markets in Taiwan, New Zealand and Southeast Asia also advanced. Trump said he would meet Friday with Vice Premier Liu He, head of the Chinese delegation. Trump said China wants to make a deal.
The trade war has dragged on for 15 months, damaging both economies and raising fears of a global recession. Markets have been jittery this week as U.S.-Chinese tensions escalated. Washington blacklisted a group of Chinese companies American officials said supplied technology used to repress Muslim ethnic minorities.
Beijing lashed out at American companies including Apple Inc. and the National Basketball Association over protests in Hong Kong. The Trump administration has slapped tariffs on more than $360 billion worth of Chinese imports. Tariffs on $250 billion worth of goods are set to increase to 30% from 25% on Oct. 15, and new tariffs will kick in on another $160 billion on Dec. 15. That would extend import taxes to virtually everything China ships to the United States.
China has hit back by targeting about $120 billion in U.S. goods. Meanwhile, crude prices gained after Iranian officials reported two rockets struck an Iranian tanker traveling through the Red Sea off the Saudi coast. It came amid heightened tensions between Tehran and the United States.
Benchmark U.S. crude rose 74 cents to $54.29 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 96 cents on Thursday to close at $53.55. Brent crude, used to price international oils, rose 60 cents to $59.70 per barrel in London. It added 88 cents the previous session to $59.10.
"The suggestion is that the missiles came from Saudi Arabia, which could represent an escalation in the region after a period of calm following the attack last month," said Craig Erlam of Oanda in a report.
In currency markets, the dollar rose to 108.36 yen from Thursday's 107.97 yen. The euro also rose, to $1.1060 from $1.1006, and the pound jumped almost 2% to 1.2650.