UK and US shares start on a high as US-China trade deal optimism rises

Wall Street, London’s FTSE 100 and European shares all show optimism but sterling plunges due to weak UK private sector

Wall Street opened higher as President Donald Trump said a trade deal with China was “potentially very close”, increasing optimism among investors.

This was triggered as President Xi Jinping said China wants to work out an initial trade pact with the US and has been trying to avoid a trade war.

The 0'>Dow Jones Industrial Average rose 64.94 points, or 0.23 per cent, at the open to 27,831.23. The 0'>S&P 500 opened higher by 7.87 points, or 0.25 per cent, at 3,111.41, while the 0'>Nasdaq Composite gained 24.33 points, or 0.29 per cent, to 8,530.54 at the opening bell.

London’s 0'>FTSE 100 started around 30 points higher at 7,267.86. Miners 0'>BHP and Rio Tinto were the biggest gainers while the fallers were led by Berkeley Group.

It later jumped 1.22 per cent, recouping nearly all its losses from the past two days and closed at 7326.81.

The surge was led by shares, including 0'>HSBC, oil stocks and miners, after China said it would strive to reach a "phase one" deal with the US.

The FTSE 250 was up 0.57 per cent, bolstered by industrial stocks, but gambling software maker Playtech and thread manufacturer Coats Group underperformed after lacklustre annual forecasts.

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However, the UK private sector activity deteriorated by the most in three years in November due to uncertainty surrounding the general election and Brexit.

The flash PMI for services – which account for about 80 per cent of the UK economy dropped to 48.6 in November, from 50 in October.

The figures knocked the pound, with sterling down 0.6 per cent against the dollar at $1.2831 in afternoon trading,

Meanwhile, European shares recovered as the pan-European STOXX 600 index added 0.44 per cent and closed at 403.98.

Germany's rose 0.2 per cent after IHS Markit's final Purchasing Managers' index readings showed German business conditions continued to deteriorate in November, but slower than recently.

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