VOD Vodafone Group PLC

By Nathan Allen 

European stocks climbed on Tuesday after a downbeat session in Asia, as investors awaited a resolution to the U.S.-China trade negotiations following the recent escalation in tensions.

The Stoxx Europe 600 was up 0.4% in morning trading. Germany's DAX rose 0.3% and the U.K. FTSE 100 gained around 0.6%.

In Asia, Hong Kong's Hang Seng Index dropped 1.5%, Japan's Nikkei fell 0.6% and Korea's Kospi gained 0.1%

U.S. futures pointed to opening gains of 0.5% for both the S&P 500 and the Dow Jones Industrial Average, after the two indexes on Monday each shed 2.4%, their steepest one-day losses since Jan. 3.

Telecommunications firms led gains in Europe. Vodafone Group shares rose 2.4% after the company issued an optimistic outlook, offsetting weak earnings. Industrial stocks were also trading higher even after statistics showed eurozone industrial production fell for the second straight month in March, casting doubt on the sustainability of the economy's first-quarter pickup.

Germany's Bayer AG was among Europe's biggest losers, trading 2.7% lower after a California jury awarded $2.06 billion to a couple who blamed the company's Roundup weedkiller for causing their cancer.

Volatility in global markets has surged in recent days, as the dispute between the U.S. and China intensified after a period of prolonged calm, prompting renewed concerns about global economic growth.

On Monday, Beijing hit back against a hike in U.S. tariffs with proposals to raise its own tariffs on around $60 billion of U.S. imports. President Trump responded with plans to impose a 25% levy on a further $300 billion of Chinese goods, including mobile phones and laptops, as early as this summer.

Mr. Trump didn't rule out the prospect of an accord being reached within the next few weeks, and said he was prepared to meet Chinese President Xi Jinping at the coming G-20 summit, stoking optimism for a successful outcome among some investors.

However, some analysts remained circumspect about the prospects for a speedy resolution.

"Whilst Trump's comments offered some support to market sentiment overnight, we suspect it will take more than that to repair the damage done," said London Capital Group's Head of Research Jasper Lawler in a note. "Investors will want to see concrete evidence of progress after Trump's 180-degree turn last week spooked the markets."

Kit Juckes, global strategist at Société Générale, said Tuesday's gains should be viewed as a temporary effect rather than a change in market direction.

"I wouldn't place too much faith that the current mood improvement is going to last all that long. Still, it can certainly last for a day or two," he said.

Trade tensions have also hit the yuan, driving the currency below 6.9 to the U.S. dollar in the offshore market, its weakest level since late December.

The yield on 10-year U.S. Treasurys on Tuesday edged up to 2.413%, from 2.405% on Monday. Yields move inversely to prices. German 10-year government bonds were still in negative territory at -0.063%.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was flat.

In commodities, global benchmark Brent crude oil was up 0.2% on Tuesday morning at $70.35 a barrel. Gold was down 0.2% at $1,298.80 an ounce.

(END) Dow Jones Newswires

May 14, 2019 06:04 ET (10:04 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.