Berliner Boersenzeitung - Stock markets rise as traders eye possible Trump-Xi talks

After a period of relative calm on tariffs, US President Donald Trump accused Beijing last week of violating an earlier deal to temporarily lower staggeringly high tit-for-tat levies and unveiled plans to double tolls on steel and aluminium.

"Trade tensions threatened a sharp sell-off on Monday, before news that President Trump and President Xi (Jinping) would speak on the phone helped to ease fears," said Kathleen Brooks, research director at XTB.

Hong Kong and Shanghai stock markets closed higher Tuesday, and Wall Street made solid gains.

Trade Nation analyst David Morrison noted that investors had been largely brushing off negative news about the economy linked to Trump's tariffs.

"Many remain convinced that Mr Trump's trade wars will soon come to an end, perhaps basing this view on 'TACO', or Trump Always Chickens Out," he said.

Europe's main indices also pushed higher despite the collapse of the Dutch government.

Far-right Dutch leader Geert Wilders withdrew his party from the government in a row over immigration, bringing down a shaky coalition and likely ushering in snap elections.

It opens up a period of political uncertainty in the Netherlands -- the European Union's fifth-largest economy and a major exporter -- as far-right parties make gains across the continent.

The Netherlands is part of the eurozone, where official data on Tuesday showed the area's inflation eased in May to its lowest level in eight months, back below the European Central Bank's two-percent target.

The ECB had already been widely expected to cut eurozone interest rates this week, putting pressure on the euro.

Among companies, Nvidia shares gained 2.8 percent as it overtook Microsoft as the biggest US company by market value.

- Growth downgrade -

Overall, investors were focused on the United States and China.

Officials from both sides are set for talks on the sidelines of an Organisation for Economic Cooperation and Development ministerial meeting Wednesday in Paris.

The OECD on Tuesday slashed its 2025 growth outlook for the global economy to 2.9 percent from 3.1 percent previously expected.

It also said the US economy would expand by 1.6 percent, down from an earlier estimate of 2.2 percent.

The group noted that "substantial increases" in trade barriers, tighter financial conditions, weaker business and consumer confidence, as well as heightened policy uncertainty would all have "marked adverse effects on growth" if they persist.

"For everyone, including the United States, the best option is that countries sit down and get an agreement," OECD chief economist Alvaro Pereira told AFP.

Data on Tuesday indicated Chinese factory activity shrinking at its fastest pace since September 2022.

Also in focus was Trump's signature "big, beautiful bill," headlined by tax cuts slated to add up to $3.0 trillion to the nation's debt at a time of heightened worries over the country's finances.

US senators have started what is certain to be fierce debate over the policy package, which partially covers an extension of Trump's 2017 tax relief through budget cuts projected to strip health care from millions of low-income Americans.

Crude prices rose on concerns that Canadian wildfires could impact oil supplies.

- Key figures at around 2015 GMT -

New York - Dow: UP 0.5 percent at 42,519.64 points (close)

New York - S&P 500: UP 0.6 percent at 5,970.37 (close)

New York - Nasdaq Composite: UP 0.8 percent at 19,398.96 (close)

London - FTSE 100: UP 0.2 percent at 8,787.02 (close)

Paris - CAC 40: UP 0.3 percent at 7,763.84 (close)

Frankfurt - DAX: UP 0.7 percent at 24,091.62 (close)

Tokyo - Nikkei 225: DOWN 0.1 percent at 37,446.81 (close)

Hong Kong - Hang Seng Index: UP 1.5 percent at 23,512.49 (close)

Shanghai - Composite: UP 0.4 percent at 3,361.98 (close)

Euro/dollar: DOWN at $1.1371 from $1.1443 on Monday

Pound/dollar: DOWN at $1.3518 from $1.3548

Dollar/yen: UP at 144.03 yen from 142.71 yen

Euro/pound: DOWN at 84.11 pence from 84.46 pence

Brent North Sea Crude: UP 1.6 percent at $65.63 per barrel

West Texas Intermediate: UP 1.4 percent at $63.41 per barrel

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(G.Gruner--BBZ)