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Stock markets edged up globally on Tuesday on a report that the United States and China were seeking to resume talks to defuse a budding trade war, while the dollar rose against the yen after the Bank of Japan said it intends to keep interest rates low.

Representatives of U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He have been speaking privately as they seek to restart negotiations and avoid a full-scale trade war, Bloomberg reported, citing sources.

“The most important influence on the markets today is some tempering of the trade war escalation,” said Bill Northey, senior vice president at U.S. Bank Wealth Management in Helena, Montana.

Stocks rebounded on the news, with regional indexes for Britain’s FTSE 100, Germany’s DAX and France’s CAC 40 all climbing.

The pan-European FTSEurofirst 300 index of leading regional shares closed up 0.38 per cent while MSCI’s gauge of stocks across the globe gained 0.27 per cent.

Canada's main stock index enjoyed broad-based gains on Tuesday

The Toronto Stock Exchange’s S&P/TSX Composite index rose 85.87 points, or 0.53 per cent, at 16,431.34.

Ten of the index’s 11 major sectors were rose. Only information technology stocks fell on the day.

The materials sector, which includes precious and base metals miners, added 1.2 per cent, boosted by shares of First Quantum Minerals Ltd., which jumped 6.1 per cent after posting quarterly results.

Conversely, WestJet Airline Ltd. fell 8.2 per cent, while Shopify Inc. dropped 5.6 per cent. Both released results that disappointed the Street.

In New York, the Dow and S&P 500 posted their biggest monthly percentage gains since January.

The Dow Jones Industrial Average rose 108.36 points, or 0.43 per cent, to 25,415.19, the S&P 500 gained 13.67 points, or 0.49 per cent, to 2,816.27 and the Nasdaq Composite added 41.79 points, or 0.55 per cent, to 7,671.79.

The market has withstood the recent technology sell-off and fears of a full-blown trade war remarkably well, said Hank Smith, co-chief investment officer at Haverford Trust in Radnor, Pennsylvania.

U.S. President Donald Trump pays attention to the stock market and if there were a significant sell-off on trade tariff headlines, Smith said, Trump would reverse positions.

“The economy has momentum to withstand these tit-for-tat trade spats that are going on right now. The market is, at least for now, seeing this as negotiations as opposed to the beginning of an all out-out global trade war,” Smith said.

Meanwhile, Bank of Japan reassurances that it will maintain super-easy monetary policies for an “extended period of time” pushed the yen down and bond yields lower worldwide.

The U.S. dollar firmed 0.75 per cent against the yen, putting it on pace for its best day in nearly three weeks, after the BOJ said it would keep rates “very low” in comments that brought some relief to a market that had braced for bigger changes. The benchmark 10-year Japanese government bond dropped five basis points after the announcement.

Investors await meetings of the U.S. Federal Reserve on Tuesday and Wednesday and the Bank of England on Thursday.

“We still have a decent amount of news ahead of us,” said George Goncalves, head of U.S. rate strategy at Nomura Securities International.

Benchmark 10-year U.S. Treasury notes last rose 3/32 in price to yield 2.9635 per cent.

Oil prices fell on Tuesday, closing out the largest monthly decline in two years on supply worries after OPEC output reached a 2018 high in July, overshadowing reports that the United States and China might reopen trade talks that could boost demand.

October Brent crude futures fell $1.34 to settle at $74.21 a barrel. The September contract, which expires later on Tuesday, settled at $74.25. U.S. crude futures fell $1.37, or nearly 2 per cent, to settle at $68.76.

Brent lost more than 6 per cent in July, while U.S. crude futures slumped about 7 per cent, the biggest monthly decline for both benchmarks since July 2016.

Reuters

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 17/05/24 4:00pm EDT.

SymbolName% changeLast
FM-T
First Quantum Minerals Ltd
+7.53%19.43
SHOP-T
Shopify Inc
+1.14%79.63

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