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By David Hodari 

Global stocks climbed Tuesday, as investors awaited developments in trade talks between Washington and Beijing that kicked off with a phone call involving key negotiators.

U.S. futures put both the S&P 500 and the Dow Jones Industrial Average on course to gain 0.6% at the New York open. Trade-exposed stocks like Boeing, up 1% in premarket trade, were on course for opening rises.

The Stoxx Europe 600 was up 1.6% in midday trading, retracing most of the losses that dragged the index to a two-year low Monday after U.K. Prime Minister Theresa May postponed a crucial vote on the Brexit bill.

Chinese stocks gained, with the Shanghai Composite Index and the Shenzhen A-Share climbing 0.4% and 0.9%, respectively, after a phone call involving U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He focused on Chinese purchases of agricultural products and changes to fundamental Chinese economic policies.

Apple Inc., also up 1% in premarket trading, was among the tech stocks set to climb, after facing pressure Monday on the news that a Chinese court had ordered Apple to stop selling older iPhone models, following findings that the company had infringed on two Qualcomm patents.

The court ruling added another source of friction in the trade skirmish between the world's two largest economies, as did the recent arrest in Canada of Huawei Technologies Co. Chief Financial Officer Meng Wanzhou on behalf of U.S. authorities. Ms. Meng is accused of lying to banks about Huawei's ties to a company that violated U.S. sanctions on Iranian business.

The Trump and Xi administrations have been locked in a battle over trade for months but the latest developments have marked a shift in focus for some investors. While earlier rounds of tariffs were more broadly-based, the accusations and recriminations of recent weeks have focused more sharply on U.S. allegations of intellectual-property theft and cyber espionage on the part of China, according to Cesar Perez Ruiz, chief investment officer at Pictet Wealth Management.

"I don't call it a trade war, anymore. I call it a tech war," Mr. Perez Ruiz said.

Another source of early week pressure, uncertainty over the U.K.'s route out of the European Union, also appeared to ease Tuesday, with the British pound recovering 0.4% versus the U.S. dollar. Sterling still remained near the 18-month low it hit Monday, though, while the yield on 10-year British government bonds was 1.231%, having partially recovered after falling to 1.151% late Monday. Yields go up when prices go down.

Still, the shock decision by the May administration to pull the vote served to further damage the reliability of U.K. assets for some investors.

"If you're a macro investor you're going to get blown out of the water by events like yesterday's," said John Wraith, head of U.K. rates strategy at UBS. "It makes investors incapable of trading those markets with any conviction whatsoever, so you see a lot of fund managers staying neutral and keeping their exposure to a minimum."

Elsewhere, India's Nifty 50 index slumped 1.9% following the resignation of the governor of its central bank.

Central banking policy was also a subject of focus in the U.S., where producer price figures, due out later in the day, will be parsed for any signals as to the health of the American economy.

Market participants widely expect the Federal Reserve to announce an increase in interest rates when it meets next week, with CME Group numbers giving a 75% probability of such an outcome.

Any forward guidance out of the Fed will be closely scrutinized, with some investors suggesting Chairman Jerome Powell has conveyed mixed messages over recent months, after first suggesting rates weren't close to neutral and then backtracking on those remarks.

"I think he got a bit ahead of himself saying that we're not close to neutral," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. "I think that was language we weren't prepared for and it helped tip the market. Now I think you'll see his language more focused on gradual patience."

In commodities, Brent crude oil prices were up 1% at $60.54 a barrel, rallying on faltering Libyan production. Gold prices were up 0.3% at $1,253.20 a troy ounce.

Write to David Hodari at David.Hodari@dowjones.com

(END) Dow Jones Newswires

December 11, 2018 07:47 ET (12:47 GMT)

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