Global stocks regain ground from two-month lows as U.S.-China fears ease

NEW YORK (Reuters) – Global stocks rebounded on Tuesday from two-month lows as investors took heart from comments of U.S. and Chinese officials a day after a spike in tensions between the world’s two largest economies rattled financial markets.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 14, 2019. REUTERS/Brendan McDermid

Fears that the United States and China were spiraling into a fiercer, more protracted trade dispute that could derail the global economy have shaken investors in the past week. On Monday, MSCI’s gauge of stocks across the globe posted its biggest one-day decline in over five months.

On Tuesday, the MSCI index gained 0.42%.

U.S. President Donald Trump sounded optimistic about prospects for a trade deal even as his administration readied 25% tariffs on all remaining Chinese imports, while the Chinese government said the two sides had agreed to keep talking. This followed Washington’s decision last week to hike its levies on $200 billion of Chinese imports to 25% from 10%.

“It’s likely that it will take markets a day or two to adjust to this increased rhetoric around trade, because markets up until a week ago thought that trade had been put to bed,” said Carol Schleif, deputy chief investment officer with Abbot Downing in Minneapolis.

The Dow Jones Industrial Average rose 196.33 points, or 0.78%, to 25,521.32, the S&P 500 gained 23 points, or 0.82%, to 2,834.87 and the Nasdaq Composite added 69.29 points, or 0.91%, to 7,716.31.

The benchmark S&P 500 recorded its biggest one-day loss since Jan 3 on Monday, after China struck back in the trade dispute by saying it would impose higher tariffs on a range of U.S. goods.

On Tuesday, the pan-European STOXX 600 index rose 0.73%.

“There is a bit of a rebound,

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