October 30, 2018 / 1:35 AM / 17 days ago

U.S. leads equities higher on hopes of U.S.-China trade deal

NEW YORK (Reuters) - Broad gains in the U.S. equity market boosted a measure of global stock markets on Tuesday after President Donald Trump said a “great deal” could be struck with China that would relieve fears of a growing trade war between the world’s two largest economies.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 30, 2018. REUTERS/Brendan McDermid

MSCI’s gauge of stocks across the globe .MIWD00000PUS gained 1 percent. Still, the index is down nearly 9 percent for the month.

Investors remained cautious despite the modest gains.

“At this point, nobody can say the equity market is bottoming out. Global investor sentiment remains shaky,” said Yasuo Sakuma, chief investment officer at Libra Investments in Tokyo.

Market participants also kept their hopes in check regarding trade.

“We don’t see the trade war being resolved any time soon,” said Rabobank’s senior macroeconomic strategist Teeuwe Mevissen. “And it comes at a time when we see all the sentiment indicators in the euro zone but also in the U.S., too, cooling down.”

Trump said during an interview with Fox News late on Monday that he thought there could be an agreement with China on trade. But he also said he had billions of dollars worth of new tariffs ready to be imposed if a deal was not possible.

The Dow Jones Industrial Average .DJI rose 431.72 points, or 1.77 percent, to 24,874.64, the S&P 500 .SPX gained 41.38 points, or 1.57 percent, to 2,682.63 and the Nasdaq Composite .IXIC added 111.36 points, or 1.58 percent, to 7,161.65.

The gains were broad, with all 11 sectors of the benchmark S&P index up for the day. The rally helped turn both the S&P 500 and the Dow Jones Industrial Average once again positive for the year, though each is up less than 1 percent since the beginning of January. Both were up over 7 percent for the year at the start of October.

“This is a continuation of the recovery we saw yesterday,” said Hugh Johnson, chief investment officer with Hugh Johnson Advisors in Albany, New York.

General Electric Co (GE.N), however, fell nearly 9 percent. GE slashed its quarterly dividend to a penny a share, promised to restructure its power unit and said it faced a deeper accounting probe.

Meanwhile, data showed the Italian economy had ground to a halt in the third quarter as both domestic demand and trade flows failed to spur growth.

The flat reading was the weakest since the fourth quarter of 2014 and renewed pressure on Italy’s government debt in the bond markets.

The pan-European STOXX 600 index rose 0.01 percent.

The chill around China and global trade left emerging- market stocks at an 18-month low, with MSCI’s index .MSCIEF down for a sixth day in a row.

The euro wallowed near a 10-week low of $1.1352 as the dollar .DXY climbed to a 2 1/2-month peak against a basket of the world’s top six currencies.

Oil prices fell more than 1 percent in choppy trading on signs of rising supply and concern that global economic growth and demand for fuel would be hit by a deepening of the U.S.-China trade dispute.

U.S. crude CLcv1 fell 1.28 percent to $66.18 per barrel and Brent LCOcv1 was last at $76.07, down 1.64 percent.

Benchmark 10-year U.S. Treasury notes US10YT=RR last fell 7/32 in price to yield 3.1132 percent, from 3.087 percent late on Monday.

GRAPHIC-Developed stocks performance vs earnings - tmsnrt.rs/2P0bJ3O

GRAPHIC-Global assets in 2018 - tmsnrt.rs/2jvdmXl

GRAPHIC-World FX rates in 2018 - tmsnrt.rs/2egbfVh

GRAPHIC-Emerging markets in 2018 - tmsnrt.rs/2ihRugV

GRAPHIC-MSCI All Country World Index Market Cap - tmsnrt.rs/2EmTD6j

Reporting by David Randall; Editing by Bernadette Baum, Nick Zieminski and Dan Grebler

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