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World stocks climbed for a fifth session on Wednesday on optimism over U.S.-China trade talks and for a softer British exit from the European Union, while oil prices retreated after an unexpected rise in inventories.

U.S. stocks climbed in early trading after White House economic adviser Larry Kudlow had said on Tuesday that China and the United States expect to make more headway in trade talks this week. In addition, the Financial Times reported the two sides were drawing closer to a deal.

“What the market has certainly relied upon is that China is one of the last legs here to get solidified,” said Paul Springmeyer, managing director at U.S. Bank Wealth Management Private Client Reserve in Minneapolis.

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Still, U.S. economic data kept gains on Wall Street in check, as a gauge of the labor market showed private employers added fewer jobs than anticipated in March while a separate report showed services sector activity slowed to a more than 1-1/2-year low, highlighting a loss of momentum in the economy.

“The underlying fundamentals certainly are still supportive of equities but needless to say the kind of slowdown in metrics and in growth across the globe as well seems to be taking hold somewhat,” said Springmeyer.

Based on the latest available data, the Dow Jones Industrial Average rose 44.22 points, or 0.17 per cent, to 26,223.35, the S&P 500 gained 6.01 points, or 0.21 per cent, to 2,873.25 and the Nasdaq Composite added 46.72 points, or 0.6 per cent, to 7,895.41.

Canada’s main stock index finished flat on Wednesday as resource stocks weighed

The Toronto Stock Exchange’s S&P/TSX composite index was unofficially up 15.99 points, or 0.1 per cent, at 16,279.86.

Energy stocks dipped 1.3 per cent with Peyto Exploration and Development Corp. losing 5 per cent and Encana Corp. down 4.7 per cent.

Materials stocks fell 0.4 per cent. Ivanhoe Mines Ltd. slid 5.1 per cent, while Teck Resources Ltd. finished 2.6 per cent lower.

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Financial stocks rose 0.4 per cent in morning trading, led by a 1-per-cent rise in Sun Life Financial Inc.

MSCI’s gauge of stocks across the globe gained 0.55 per cent.

Aside from trade optimism, European shares were lifted by data out of China that showed activity in its services sector hit a 14-month high and the latest plan by British Prime Minister Theresa May to reach a deal on Brexit. In addition, euro zone retail sales were better than expected in February.

With a fourth straight day of gains, European stocks closed at an eight-month high. The pan-European STOXX 600 index rose 1.01 per cent.

Britain’s opposition Labour Party said it had held constructive discussions with Prime Minister Theresa May on breaking the Brexit deadlock.

Sterling climbed on the hopes for a Brexit solution while the U.S.-China trade talks optimism bolstered risk appetite and sent the euro higher against the dollar.

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The dollar index, tracking the unit against six major currencies, fell 0.26 per cent, with the euro up 0.3 per cent to $1.1236. Sterling was last trading at $1.3159, up 0.24 per cent on the day.

Signs of progress in U.S.-China trade talks and decent Chinese and U.S. factory activity data in recent days have boosted sentiment and helped world recession fears recede. On Friday, investors will look at the monthly U.S. payrolls report for a fresh economic catalyst.

Generally strong world stocks and hopes of a softer Brexit sparked a sell-off in safe-haven government bonds, with U.S. yields hitting a 1-1/2-week high.

Benchmark 10-year notes last fell 12/32 in price to yield 2.5205 per cent, from 2.479 per cent late on Tuesday.

Oil prices edged down on Wednesday after U.S. government data showed a surprise build in crude inventories, but futures held near their highest in almost five months as OPEC-led output cuts and sanctions on Iran tightened the supply outlook.

Brent futures settled at $69.31 a barrel, losing 6 cents. Their session high was $69.96, the strongest since Nov. 12, when they traded above $70.

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U.S. West Texas Intermediate crude settled at $62.46 a barrel, falling 12 cents after briefly hitting $62.99, the highest since Nov. 7.

Crude stocks in the United States rose 7.2 million barrels last week, as net imports climbed, production edged higher to a new record and refining rates slowed, the Energy Information Administration said. Analysts had forecast a decrease of 425,000 barrels.

“Crude imports rose and crude exports fell, which translates into considerably higher net imports. Crude oil processing remained lower than usual. Crude oil production increased to a new record level of 12.2 million barrels per day,” said Commerzbank analyst Carsten Fritsch. “All of this contributed to the large stock build.”

Despite the sharp increase in U.S. crude inventories, market participants said prices were positioned to move up on tightening global supply and signs of demand picking up.

“Those are the issues that have supported the market here,” said Bob Yawger, director of futures at Mizuho in New York. “At the end of the day, this market is really bulled up and it wants to trade higher.”

Reuters

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