Volkswacht Bodensee - US stocks bounce back as Trump softens China trade tone

US President Donald Trump said in an interview with Fox Business that he will hold talks with China's Xi Jinping during the upcoming APEC summit in South Korea, a week after he threatened to call off the meeting.

Trump, who last week threatened large tariffs in response to Chinese rare-earth export controls, said in the interview that the higher tariffs were "not sustainable."

Investors also took a more sanguine view of regional banks after the sector was pummeled Thursday following disclosures from two mid-sized players of expected losses tied to problem loans.

But on Friday, those banks -- Salt Lake City-based Zions Bancorp and Phoenix-based Western Alliance Bancorporation -- both rallied, along with other peer companies, suggesting investors, are less fearful of systemic problems.

"It was all set to be another frantic Friday for markets as a US regional bank crisis appeared on the horizon, but comments from President Trump have once again lifted equities off their lows," said Chris Beauchamp, Chief Market Analyst at trading platform IG.

Investors have been nervously watching the US banking sector since parts company First Brands and subprime lender Tricolor filed for bankruptcy in September, with the former owing billions to lenders.

Those fears deepened this week after Zions disclosed a $50-million charge tied to commercial loans from its California arm, while Western Alliance said a borrower failed to deliver the promised collateral.

A sell-off on Thursday "may be overdone," said David Morrison, analyst at investment platform Trade Nation.

"Then again, a few analysts have been warning about a lack of transparency across private credit and private equity for a while now. So, there’s certainly a risk of more bad news to come," he added.

Europe's main indices fell, with bank shares taking a hit.

Deutsche Bank shares slumped six percent, while French bank Societe Generale shed nearly five percent and Britain's Barclays dropped 5.7 percent.

Hong Kong and Shanghai dropped more than two percent, and Tokyo also closed lower.

Adding to unease, lawmakers in Washington are still no closer to ending a government shutdown that has delayed the release of key economic data used by the Federal Reserve to decide on policy.

Still, expectations the Fed will cut interest rates at least once more this year has given traders some support.

- Key figures at around 2010 GMT -

New York - Dow: UP 0.5 percent at 46,190.61 (close)

New York - S&P 500: UP 0.5 percent at 6,664.01 (close)

New York - Nasdaq Composite: UP 0.5 percent at 22,679.97 (close)

London - FTSE 100: DOWN 0.9 percent at 9,354.57 (close)

Paris - CAC 40: DOWN 0.2 percent at 8,174.20 (close)

Frankfurt - DAX: DOWN 1.8 percent at 23,830.99 (close)

Tokyo - Nikkei 225: DOWN 1.4 percent at 47,582.15 (close)

Hong Kong - Hang Seng Index: DOWN 2.5 percent at 25,247.10 (close)

Shanghai - Composite: DOWN 2.0 percent at 3,839.76 (close)

Euro/dollar: DOWN at $1.1670 from $1.1687 on Thursday

Pound/dollar: DOWN at $1.3433 from $1.3434

Dollar/yen: UP at 150.50 yen from 150.43 yen

Euro/pound: DOWN at 86.88 percent from 86.99 pence

West Texas Intermediate: UP 0.1 percent at $57.54 per barrel

Brent North Sea Crude: UP 0.4 percent at $60.34 per barrel

burs-jmb/sla

E.Burkhard--VB