LONDON: Global stock markets mostly rose Tuesday on hopes a trade war will be avoided following the G7 summit in Biarritz, but China's yuan currency nevertheless slumped to a new 11.5-year low.
Frankfurt and Paris shares advanced solidly, but London less so as British investors played catch-up after a three-day holiday weekend.
Asian equities mainly gained, recovering from the previous day's pounding after President Donald Trump said China-US trade talks would resume soon.
Wall Street came off to a stronger start Tuesday as a more positive trade talk vibe took hold.
China's beleaguered yuan nosedived in the morning Tuesday deals to 7.1722 yuan to the dollar -- a level was last seen in 2008.
The unit had already plunged Monday on weekend news that Washington would hike tariffs on more than half-a-trillion dollars of Chinese imports after Beijing unveiled levies on tens of billions of dollars of US goods.
"It's been a rollercoaster ride of trade war sentiment over the last few months and it seems traders have now entered into a state of confusion at where things actually currently stand," said analyst Craig Erlam at trading firm Oanda.
"A sudden and significant escalation in the trade war last week came as China and the US both announced new tariffs -- well, an increase in the case of the latter -- triggering another plunge in stock markets as investors fled for safety.
This was followed by mixed messages from the US President, who initially admitted to having second thoughts which the White House later clarified as not being more aggressive." However, Trump later said in a G7 news conference in France that negotiations would resume very soon and Beijing had telephoned saying it wanted to strike a deal.
He later described the talks as "more meaningful than at any time", while China's top negotiator called for calm and said he opposed any escalation in the stand-off.
"What is clear when looking past all the noise is that tariffs barriers on both sides have increased or will shortly do so, and investors need to focus on what Trump does and less on what he says," said Michael Hewson, chief market analyst at CMC Markets UK.
In commodities, oil prices rose after Trump said he was prepared to meet Iran's Hassan Rouhani in the next few weeks, following talks over Tehran's nuclear programme at the G7 summit.
"Expectations are...rising that tensions in the Gulf can be de-escalated following President Macron's overtures to broker a meeting between Donald Trump and his Iranian counterpart," noted AxiTrader analyst James Hughes.
Back in Europe, talk of recession resumed after final German GDP data confirmed that the continent's top economy contracted in the second quarter, with many saying it could easily do so again in the third.
"Given that other data points for Germany in Q3 have been weak there's every chance that we see another contraction and satisfy the definition of a technical recession," said David Cheetham at XTB.