LONDON: European stock markets recovered Tuesday but concerns about the Huawei row and broader China-US trade war kept investors on edge.
The pound meanwhile tumbled on lingering Brexit turmoil, before bouncing back.
Against sterling, the European single currency reached a three-month high at 87.89 pence.
The pound also hit a four-month low at $1.2685.
European shares had fallen heavily Monday, as did New York's tech-rich Nasdaq, after Google said it was beginning to sever ties with Chinese telecoms giant Huawei, days after US President Donald Trump's decision to bar it from the US market.
The Huawei development -- with the US citing national security concerns -- has muddied the waters in the tariffs stand-off between Washington and Beijing, which was thought to have been close to conclusion at the start of the month.
Some observers are now warning that stalled talks between the economic superpowers might not see any progress before a hoped-for meeting between Trump and Chinese counterpart Xi Jinping at the G20 summit in June.
"The market was a little optimistic that a trade deal would just get done here this month," Brett Ewing, chief market strategist at First Franklin Financial Services, told Bloomberg News.
Dealers have "definitely come to terms with a longer term trade negotiation process".
While the Commerce Department issued a 90-day reprieve on the ban on dealing with Huawei, saying breathing space was needed to avoid huge disruption, the two appear to be digging their heels in.
The developing crisis had a mixed impact on Asia's tech firms, with Samsung Electronics, a rival to Huawei in the smartphone market, rallying 2.7 percent.
Analysts say the US ban will damage Huawei's ability to sell phones outside China, offering Samsung a chance to consolidate its position at the top of the global market.
Wall Street opened higher on Tuesday, with analysts at brokerage Charles Schwab putting the rebound down to "the US provided limited relief for business restrictions on" Huawei.
- Pound suffers again -
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The pound suffered further on Tuesday as British Prime Minister Theresa May struggled to get opposition Labour backing for her Brexit deal, meaning it was likely to fail on her fourth attempt to pass it through parliament next month.
There is growing concern that May will step down if she loses again, leaving the path open for a hardliner who is keen for a no-deal divorce, which many experts say would be economically destructive.
In commodities trading, oil prices were mixed after major producers said supplies were sufficient and stockpiles still rising.
- Key figures around 1330 GMT -
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London - FTSE 100: UP 0.4 percent at 7,340.46 points
Frankfurt - DAX 30: UP 0.9 percent at 12,145.90
Paris - CAC 40: UP 0.5 percent at 5,383.74
EURO STOXX 50: UP 0.5 percent at 3,387.57
New York - Dow: UP 0.5 percent at 25,804.48
Tokyo - Nikkei 225: DOWN 0.1 percent at 21,272.45 (close)
Hong Kong - Hang Seng: DOWN 0.5 percent at 27,657.24 (close)
Shanghai - Composite: UP 1.2 percent at 2,905.97 (close)
Pound/dollar: UP at $1.226 from $1.2725 at 2050 GMT
Euro/pound: DOWN at 87.65 pence from 87.72
Euro/dollar: DOWN at $1.1153 from $1.1165
Dollar/yen: UP at 110.55 yen from 110.04 yen
Oil - Brent Crude: UP five cents at $72.02 per barrel
Oil - West Texas Intermediate: DOWN 10 cents at $63.00 per
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