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U.S. stocks were higher on Tuesday as investor concerns about rising U.S.-China trade tension eased after Chinese President Xi Jinping promised to cut import tariffs.

The three main indexes, however, were off their session highs as investors locked in some gains ahead of the start of the earnings season this week.

Nine of the 11 major S&P sectors were higher, with the energy index adding more than 3 percent as oil broke above $70 a barrel.

“The markets are saturated and it is a bit of profit taking as the markets get set for the most anticipated financial earnings this Friday,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville.

U.S. stocks will face a major test in coming weeks as first-quarter earnings pour in. JPMorgan Chase, Citigroup and Wells Fargo will kick off the earnings season on Friday.

Analysts expect quarterly profits for S&P 500 companies to rise 18.5 per cent from a year ago, which would be the biggest gain in seven years, according to Thomson Reuters I/B/E/S.

The Dow Jones Industrial Average was up 379.35 points, or 1.58 per cent, at 24,358.45, and the S&P 500 was up 37.97 points, or 1.45 per cent, at 2,651.13. The Nasdaq Composite was up 107.63 points, or 1.55 per cent, at 7,057.97.

Xi said China will sharply widen market access for foreign investors, a point of contention for U.S. President Donald Trump’s administration.

His comments buoyed global markets, which have been under pressure as China and the United States threatened each other with billions in tariffs and investors feared that protectionist measures would hit global economic growth.

“What you are seeing in the market is an alleviation of trade war fears and people trying to get back in and reposition themselves for what they hope - no trade war,” said Robert Pavlik, chief investment strategist and senior portfolio manager at SlateStone Wealth LLC in New York.

The so-called FANG stocks - Facebook Inc, , Netflix Inc and Alphabet Inc’s Google - gave up most of their gains and were up between 0.5 per cent and 1.3 per cent ahead of Facebook CEO Mark Zuckerberg’s testimony before U.S. lawmakers on Tuesday and Wednesday.

Zuckerberg is expected to strike a conciliatory tone in an attempt to blunt possible regulatory fallout from the privacy scandal engulfing his social network.

Sprint shares jumped 18 per cent after reports that the company had restarted merger talks with T-Mobile US Inc .

Canada’s main stock index rose on Tuesday as higher oil prices lifted energy shares and trade war worries receded after Xi promised to cut import tariffs.

At 1:29 p.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index rose 46.44 points, or 0.3 per cent, to 15,339.75.

The energy sector advanced 2.3 per cent and financial sector rose half a percentage point. Together, the two sectors account for more than half the weight of TSX.

Shares of oil producers Suncor Energy Inc., Enbridge Inc and Canadian Natural Resources rose at least 1 per cent each, lifting the energy sector.

Oil prices rose nearly 3 per cent on Tuesday as investors grew more confident that a brewing trade dispute between the United States and China may be resolved without harming the global economy.

Brent crude futures were up $2, or 2.9 per cent, at $70.65 a barrel. West Texas Intermediate crude futures also gained 2.9 per cent, or $1.85, to $65.27 a barrel.

President Xi Jinping on Tuesday promised to open China’s economy further and lower import tariffs, striking a conciliatory tone on the trade tensions between his country and the United States.

Equities markets gained on the indication that a trade war is increasingly unlikely.

Both benchmarks have risen roughly 5 per cent in the past two trading days. Brent is only 0.6 per cent shy of its 2018 peak of $71.05 hit in late January. WTI is about 2 per cent below its 2018 peak of $66.66.

“It’s not so much ‘risk on/risk off’, as it is ‘trade war on/trade war off’ and, at the moment, we’re ‘trade-war off,’” London Capital Group’s Jasper Lawler said.

Concerns over a possible trade war between the two largest economies contributed to a more than four percent decline in the prices of both oil benchmarks last week.

Middle East tensions also supported prices on Tuesday, said Phillip Streible, analyst at RJO Futures in Chicago.

“Oil markets are getting a bounce on increasing speculation about Trump and Syria,” Streible said.

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Netflix Inc
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