Volkswacht Bodensee - Stocks diverge as ECB rate cut looms, Trump tussles with Fed

Safe-haven investment gold hit a fresh record above $3,357.78 an ounce, while the dollar and oil prices firmed.

Fed chairman Jerome Powell warned on Wednesday that Trump's sweeping tariffs on virtually every trade partner could put the US central bank in the unenviable position of having to choose between tackling inflation and unemployment.

His comments led to sharp losses Wednesday on Wall Street, as did chip giant Nvidia flagging hefty costs it faced owing to the US-China trade war.

"All-in-all, the trade news and Powell's comments provided a tough backdrop for market," said a Deutsche Bank analyst note.

Trump hit back Thursday, slamming Powell for not lowering interest rates like the ECB has done and saying his "termination cannot come fast enough".

Eyes were on the ECB which is expected to cut interest rates again, with Trump's stop-start tariff announcements sowing concern in the eurozone.

Tokyo led Asian stocks higher as optimism over Japan-US trade talks offset Federal Reserve boss Jerome Powell's warning that Trump's tariffs could force officials to choose between fighting inflation or unemployment.

Investors are keeping a nervous eye on Washington as governments scramble to cut deals to avert crippling tariffs the US president unveiled on his April 2 "Liberation Day" but then delayed for 90 days.

"Tariffs continue to make the headlines, with Donald Trump claiming that 'big progress' had been made in talks with Japanese negotiators, aimed at lowering the hefty tariffs that the US will otherwise impose in under three months," noted Steve Clayton, head of equity funds at Hargreaves Lansdown.

With Japanese companies the biggest investors into the United States, Tokyo's negotiations are of particular interest to markets -- with some describing it as the canary in the coal mine -- and traders took heart from early signs.

Trump posted on social media that there had been "Big Progress!"

Tokyo's envoy Ryosei Akazawa said: "I understand that the US wants to make a deal within the 90 days. For our part, we want to do it as soon as possible."

While Japan's Prime Minister Shigeru Ishiba warned that the talks "won't be easy", he said the president had "expressed his desire to give the negotiations... the highest priority".

Hopes that Trump's blistering tariffs can be pared back have helped temper some of the disquiet on markets after a rout at the start of the month fuelled by talk of a global recession and an upending of historic trading norms.

- Key figures at 1130 GMT -

London - FTSE 100: DOWN 0.7 percent at 8,218.19 points

Paris - CAC 40: DOWN 0.8 percent at 7,268.90

Frankfurt - DAX: DOWN 0.6 percent at 21,178.14

Tokyo - Nikkei 225: UP 1.4 percent at 34,377.60 (close)

Hong Kong - Hang Seng Index: UP 1.6 percent at 21,395.14 (close)

Shanghai - Composite: UP 0.1 percent at 3,280.34 (close)

New York - Dow: DOWN 1.7 percent at 39,669.39 (close)

Euro/dollar: DOWN at $1.1368 from $1.1395 on Wednesday

Pound/dollar: DOWN $1.3234 at $1.3235

Dollar/yen: UP at 142.50 yen from 142.12 yen

Euro/pound: DOWN at 85.91 pence from 86.06 pence

Brent North Sea Crude: UP 1.0 percent at $66.51 per barrel

West Texas Intermediate: UP 1.2 percent at $62.55 per barrel

I.Stoeckli--VB