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European stocks gain on hopes of trade war truce

European stocks made gains after positive indications from China over its trade war with the U.S.

European stocks made gains on Friday morning after China struck an accommodating tone over its trade war with the U.S., while British opposition lawmakers plan to trigger an emergency debate to prevent a no-deal Brexit.

The pan-European Stoxx 600 climbed 0.8% with autos jumping 1.8%, as all sectors and major bourses traded in positive territory.

Stocks worldwide are experiencing a reprieve after the Chinese Ministry of Commerce on Thursday indicated that it would not escalate the trade war with Washington, urging negotiation and collaboration in pursuit of a “calm” resolution.

Stocks in Asia traded higher on Friday in response to the conciliatory trade tone, Japan and South Korea leading gains on the back of surges for index heavyweights such as Fanuc and SK Hynix.

In Europe, the fallout from U.K. Prime Minister Boris Johnson’s suspension of parliament rumbles on. The main opposition Labour party said on Thursday that it would trigger an emergency debate in parliament next week, in a bid to stop Johnson taking Britain out of the European Union without a withdrawal deal on October 31.

The no-deal scenario is widely opposed in the British parliament, and the elevated risk of it becoming reality has sent sterling lower. The pound was trading down at around $1.2185 on Friday morning.

In corporate news, Reuters reported on Thursday that French lender BNP Paribas plans to bid for Deutsche Bank’s equity derivatives book, with the intention of securing a deal within the next few weeks.

On the data front, French August CPI (consumer price index) inflation came in at 1.2% year-on-year, slightly softer than in July but in line with forecasts. Spanish retail sales rose by 3.2% in July from a year earlier after climbing by 2.5% in June.

U.K. consumer sentiment surveys revealed that confidence ebbed away from British businesses and consumers in August as the Brexit crisis metastasized, suggesting political turmoil is increasingly impacting the economy.

Deutsche Wohnen shares jumped 12.2% after a German newspaper reported that an incoming rent freeze in Berlin could be more lenient than previously planned.

Shares of Danish hospital equipment maker Ambu saw its shares rise 8.7% after a positive recommendation from the U.S. Food and Drug Administration (FDA).

There were no heavy losses within the Stoxx 600, but Swiss Re and French commercial real estate giant Unibail-Rodamco-Westfield each slipped 2%.

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