France's CAC 40 rose 0.7% in early trading to 5,572.27, while Germany's DAX also gained 0.7% to 12,111.88. Britain's FTSE 100 inched down 0.3% to 7,286.26. U.S. shares were set to drift higher with Dow futures rising 0.7% to 26,566. S&P 500 futures were also higher, rising 0.6% to 2,957.10.
Japan's benchmark Nikkei 225 rose 2.1% to finish at 21,085.94. Australia's S&P/ASX 200 added 0.9% to 6,613.20, while South Korea's Kospi gained 0.8% to 2,004.75. Hong Kong's Hang Seng erased earlier gains and was down 0.3% at 26,446.67, while the Shanghai Composite rose 1.0% to 2,985.86.
Investors have been worried that the U.S.-China trade war and a slowing global economy could tip the U.S. into a recession. But traders set aside those concerns, focusing instead on geopolitical developments.
In Hong Kong, the government said it was formally withdrawing the extradition bill that set off three months of protests, though protesters say they will keep up their push for their other demands to be met.
In Europe, Britain's Parliament took a big step toward passing a law that could stop Prime Minister Boris Johnson's plan to pull out of the EU on Oct. 31 with or without a withdrawal agreement. Leaving the EU without a deal that covers trade and other issues could result in economic chaos for Britain and complicate trade with member nations in the EU.
The lingering trade conflict between Washington and Beijing has roiled markets this summer. The economic uncertainty has also become a drag on companies. On Sunday, the conflict escalated as the U.S. imposed a 15% tariff on about $112 billion of Chinese products. China responded by charging tariffs of 10% and 5% on a list of American goods.
The escalation had been expected since early August when the U.S. announced plans for the new tariff measures, prompting China to retaliate. China's Commerce Ministry announced Thursday that talks with the United States on ending the tariff war will take place in early October in Washington, later than previously planned.
Some analysts warned against too much optimism. "While a drop in geopolitical risk premium comes as a welcome relief, but with the omnipresent trade war clouds looming ominously over the market threatening to come thundering down at any time, the air remains thick with caution," said Stephen Innes, Asian Pacific market strategist with AxiTrader.
ENERGY: Benchmark crude oil edged down 33 cents to $55.93 a barrel. It rose $2.32 to settle at $56.26 a barrel Wednesday. Brent crude oil, the international standard, fell 25cents to $60.45 a barrel. CURRENCIES:
The dollar rose to 106.49 Japanese yen from 106.21 yen on Wednesday. The euro strengthened to $1.1039 from $1.1009.