European stock markets surged as China said it is "evaluating" an offer to hold trade talks with the US over Donald Trump's 145% tariffs, the first sign that two largest economies in the world are moving closer to negotiations.
The Chinese Commerce Ministry issued a statement on Friday, also warning the US that using talks "as a pretext to engage in coercion and extortion would not work".
Beijing said Washington had made an approach to begin discussions about the tariffs, confirming a message earlier in the week from a social media account linked to Chinese state media.
"The US has recently taken the initiative on many occasions to convey information to China through relevant parties, saying it hopes to talk with China," the Commerce Ministry said, adding that Beijing is "evaluating this".
Beijing called for Trump to cancel unilateral tariffs and that the US needed to show "sincerity" in the talks.
This comes as concern grows that the ongoing trade fight between the world’s two biggest economies is dragging down global growth. The IMF has already trimmed its forecast for 2025, and JPMorgan is warning there’s a 60% chance of a US recession this year.
The FTSE 100 was on course to extend its winning streak to 15 days after these signs of a potential de-escalation of the tariff stand-off between US and China, said analysts.
"China's ostensible signal that it is willing to negotiate on tariffs on the US will likely be the overriding sentiment driver, though do also take note of Japan's comments about its huge holding of US Treasuries being 'on the table' in US trade talks," said ADM ISI's Marc Ostwald.
Investors had been given "real heart" that the trade outlook could be improving, said AJ Bell investment director Russ Mould, which had led to strong gains in Asia and Europe, with Germany's DAX up 1.7% and France's CAC rising 1.6%.
Some were cynical about the news. Chris Beauchamp at IG said China’s signal that it remained open to trade talks "appears to be enough for investors, especially since the US has also been putting out feelers about negotiations. But comments need to turn into concrete progress fairly soon if this rebound in equities is to be maintained."
Saxo's Neil Wilson added: "I don’t see how this is particularly earth-shattering but shows that bulls are in control and the max pain is the drift higher. I’d be amazed if [the Chinese] were not ‘considering’ talking the US about tariffs."