Volkswacht Bodensee - Stocks rise as US-China reach trade deal framework

With the Israel-Iran ceasefire holding, investors turned attention back to the wider economy and the US president's trade war.

"The key theme for markets in the next week and a half will be US trade agreements," ahead of the July 9 deadline ending reciprocal tariff reprieves, said Kathleen Brooks, research director at trading group XTB.

President Donald Trump on Thursday said the United States had signed a deal relating to trade with China, without providing further details.

China said Friday that Washington would lift "restrictive measures", while Beijing would "review and approve" items under export controls.

Adding to positive market sentiment, US Treasury Secretary Scott Bessent said a "revenge tax" on foreign-owned companies would be dropped from Trump's tax bill as he signalled a forthcoming agreement with G7 nations to exempt US firms from certain taxes.

European stock markets rose Friday, with the Paris CAC 40 leading the way around midday, boosted by a rise in luxury stocks.

Traders brushed off data showing that inflation edged up in France and Spain in June, even as it added to speculation that the European Central Bank may pause its interest rate-cut cycle.

Investor also awaited the release of the US Federal Reserve's preferred inflation measure for May due Friday.

In Asia, Tokyo rallied more than one percent to break 40,000 points for the first time since January, while Hong Kong and Shanghai equities closed lower.

Separately on Thursday, the White House indicated that Washington could extend a July deadline when steeper tariffs affecting dozens of economies are due to kick in.

The president imposed a 10-percent tariff on goods from nearly every country at start of April, but he put off higher rates on dozens of nations to allow for talks.

- Weaker dollar -

The dollar held around three-year lows Friday as traders ramp up bets on US interest rate cuts, especially after Trump hinted at replacing Fed chief Jerome Powell.

The prospect of lower borrowing costs sent the Dollar Index, which compares the greenback to a basket of major currencies, to its lowest level since March 2022.

Weak economic data on Thursday -- showing that the world's top economy contracted more than previous estimate in the first quarter and softer cosumer spending -- further fuelled rate cut expectations.

All three main equity indices on Wall Street rallied Thursday, with the Nasdaq hitting a record high and the S&P 500 within a whisker of a new closing peak.

In company news, shares in Chinese smartphone maker Xiaomi jumped more than three percent to a record high in Hong Kong as it enjoyed strong early orders for its YU7 sport utility vehicle, its second foray into the competitive electric vehicle market.

- Key figures at around 1040 GMT -

London - FTSE 100: UP 0.5 percent at 8,781.49 points

Paris - CAC 40: UP 1.3 percent at 7,654.06

Frankfurt - DAX: UP 0.7 percent at 23,806.46

Tokyo - Nikkei 225: UP 1.4 percent at 40,150.79 (close)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 24,284.15 (close)

Shanghai - Composite: DOWN 0.7 percent at 3,424.23 (close)

New York - Dow: UP 0.9 percent at 43,386.84 (close)

Euro/dollar: UP at $1.1704 from $1.1701 on Thursday

Pound/dollar: DOWN at $1.3724 from $1.3725

Dollar/yen: UP at 144.59 yen from 144.44 yen

Euro/pound: UP at 85.29 pence from 85.22 pence

West Texas Intermediate: UP 0.7 percent at $65.70 per barrel

Brent North Sea Crude: UP 0.6 percent at $67.07 per barrel

L.Meier--VB