Published:  01:00 AM, 15 May 2019

World stocks hover near two-month low

World stocks hover near two-month low

World stocks hovered near two-month lows on Tuesday, although slightly more optimistic comments from US and Chinese officials on trade brought some comfort a day after equities suffered their worst selloff so far this year.

Fears the United States and China are spiraling into a fiercer, more protracted trade dispute that could derail the global economy, has rattled share markets in recent weeks, and the selloff accelerated on Monday after China announced plans for retaliatory tariffs.

But the Chinese government's top diplomat said China and the United States both have the "ability and wisdom" to reach a trade deal that is good for both. And US President Donald Trump said he was optimistic about resolving the trade dispute.That paved the way for a positive start for the European trading session, with stock markets in London, Frankfurt and Paris 0.6% to 0.9% higher, while US stock futures rallied.

"The trade war is driving markets at the moment," said Rory McPherson, head of investment strategy at Psigma Investment Management in London."Markets were prone to a selloff after a good start to the year on expectations of policy easing from central banks and no escalation of trade tensions, and it's this latter pillar that has come away."

China has said it would impose higher tariffs on $60 billion of US goods in retaliate against a US tariff hike on Chinese goods.Asian shares took another beating on Tuesday but closed off their lows, following the more upbeat tone from US and Chinese officials.

Japan's Nikkei stock index fell to its lowest since mid-February, while broader Asian markets were dragged down by a selloff in Chinese shares.MSCI's broadest index of Asia-Pacific shares outside Japan fell over 1% to its lowest level since Jan 30, leaving MSCI's world equity index stuck near its lowest levels in around two months.

---Reuters, Shanghai

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