LONDON, Jan 09 (Reuters): World stocks extended their gains to hit a near-four week high and oil prices rose on Wednesday on optimism that the US and China may be inching toward a trade deal, soothing fears of an all-out trade war.
Delegations from China and the US ended talks that had lasted longer than expected in Beijing on Wednesday amid signs of progress on issues including purchases of US farm and energy commodities and increased access to China's markets.
MSCI's all-country index sailed 0.5 per cent higher in a fourth day of gains.
Hopes for a trade deal boosted Europe's export-oriented autos and tech sectors and lifted the pan-European STOXX 600 benchmark to a three-week high. Germany's DAX, France's CAC 40 and the UK's FTSE 100 all gained around 1.0 per cent to hover at multi-week highs.
US stock futures firmed between 0.2 and 0.4 per cent, pointing to another upbeat session ahead for Wall Street after the S&P 500 gained nearly 1.0 per cent on Tuesday.
Asian bourses saw a strong finish with Japan's Nikkei and China's blue-chip CSI 300 closing up 1.0 per cent while the tech-heavy South Korean KOSPI jumped nearly 2.0 per cent.
"The positive news around the trade talks is giving a boost to risk assets - it's what the global economy needs to see," said Chris Scicluna, head of economic research at Daiwa Capital Markets in London.
Adding to the upbeat mood were reports that Beijing plans to introduce policies to boost domestic spending on items such as autos and home appliances this year. These come on the back of Friday's monetary easing by the People's Bank of China.
"China are now firmly off the brakes and back on the accelerator," said Karen Ward, chief market strategist for EMEA at JPMorgan Asset Management.
"The sugar rush that's fading in the US, we are going to get that rush coming through in China." However, details on the outcome of the latest trade talks were scant and sources said the two sides were still far from US demands for structural reforms in China.
The rally in riskier assets has accelerated since last Friday, when Federal Reserve Chairman Jerome Powell said he was aware of risks to the economy and would be patient and flexible in policy decisions this year.
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