Global markets are bouncing back as concern over Trump's trade war eases

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Markets bounce on Thursday as fears of a full scale global trade war wane.
Major European indices are more than 1% higher in the first hour of trading.
Gains appear to be driven by conciliatory comments from President Trump's top economic advisor, Larry Kudlow.
"Don't overreact, we'll see how this works out," Kudlow said in an appearance on Fox Business.


LONDON — Markets around the world are bouncing on Thursday as fears of a full scale global trade war were once again allayed by a more conciliatory approach from the USA after an initially hostile stance.

Assets had dived on Wednesday after China announced plans for a series of retaliatory tariffs against the USA following the release on Tuesday of a list of goods the USA planned to levy tariffs on.

However, the US expressed willingness to negotiate a resolution to the trade fight.

The calm seemed to be driven by Trump's chief economic adviser Larry Kudlow urging caution, saying that markets should not "overreact."

"Don't overreact, we'll see how this works out," Kudlow said in an appearance on Fox Business. "My view is, look, I'm a growth guy, I'm a Reagan supply-side growth guy. I think at the end of this whole process, the end of the rainbow, there's a pot of gold."

Those words seemed to soothe investors, with the Dow Jones ending Wednesday up almost 1%, having dived more than 500 points in early trade. That calm then moved to Asia and Europe, with European stocks jumping at the open.

Here's the European scoreboard as of around 8.25 a.m. BST (3.25 a.m. ET):

Britain's FTSE 100 — up 1.19% at 7,117 points
Germany's DAX — up 1.65% at 12,154
France's CAC 40 — up 1.54% at 5,221
Italy's FTSE MIB — up 1.48% at 22,774
Spain's IBEX 35 — up 1.29% at 9,636

"I still believe that the world’s two largest economies will find a middle ground," Hussein Sayed, chief market strategist at FXTM said in an email.

"Although China may feel more pain if tariffs are to be applied, Trump’s political base will be severely damaged if Beijing imposed 25% tariffs on soybeans. Farmers gave Trump their votes, and he cannot pay them back by hitting their biggest importer."