Talks on resolving a dispute over trade and China's technology policies have dragged on for over a year, with both sides imposing tariffs on hundreds of billions of dollars' worth of each other's goods. The most recent round of talks, earlier this month in Washington, helped forestall a new set of tariff hikes that would have escalated tensions.
"I really like what they're saying on the other side," Economic adviser Larry Kudlow told Fox Business. If current talks go well, he said, Trump might put off imposing more tariffs planned for December. But he added, "I can't guarantee it, it's completely up to the president."
The CAC 40 in Paris reversed early losses and was flat at 5,650 in midday trading, while Germany's DAX picked up 0.3% to 12,770. London's FTSE 100 gained 0.3%, to 7,188, with a Brexit deadline looming.
Just nine days before Britain's deadline for leaving the 28-nation European bloc, Prime Minister Boris Johnson and lawmakers were facing off over the latest departure plan. Lawmakers were due to vote Tuesday on whether to approve the deal in principle and then on a schedule for debating it and possible amendments.
European Council President Donald Tusk said EU leaders would decide on whether to postpone the Oct. 31 deadline by three months depending on what the British parliament decides. Wall Street was set for a tepid start, with the future contract for the Dow Jones Industrial Average and S&P 500 futures both set to open flat or slightly higher.
While markets seemed to reflect some optimism on the U.S.-China trade front, some analysts have been skeptical. In a commentary, Mizuho Bank said "we think the current wave of trade optimism may be short-lived."
It noted that negotiations were said to be going well before they collapsed in May. And talk of a partial deal suggests many issues will remain unresolved. "Whilst scrapping of the upcoming December tariff is welcomed, this may be only marginally positive since a substantial degree of damage is already done from the existing tariffs," it said.
As they wait for trade talk developments, investors are watching corporate earnings reports after a relatively quiet Monday. In Asian trading, the Kospi in South Korea led gains, climbing 1.2% to 2,090.77 after a rally in technology companies overnight on Wall Street. Australia's S&P ASX 200 added 0.3% to 6,672.20. The Hang Seng in Hong Kong picked up 0.2% to 26,786.20, while the Shanghai Composite index reversed early losses to close 0.5% higher at 2,954.38. India's Sensex skidded 0.6% to 39,073.82.
Tokyo's markets were closed for a holiday marking the ascension of Emperor Naruhito to Japan's Chrysanthemum Throne. Benchmark crude oil rose 23 cents to $53.54 per barrel in electronic trading on the New York Mercantile Exchange.
Brent crude oil, the international standard, picked up 35 cents to $59.31 a barrel. The dollar was holding at 108.60 yen from Monday. The euro fell to $1.1136 from $1.1149.
Matt Ott in Washington contributed to this report.