Volkswacht Bodensee - Stocks rally as Trump soothes fears over China trade, Fed

Global markets, already upended by a trade war, were hit at the start of the week by fears that Trump was looking to remove central bank boss Jerome Powell for not cutting interest rates, calling him a "major loser" and "Mr. Too Late".

Observers warned such a move would have dealt a blow to the Fed's independence and spark a crisis of confidence in the world's top economy.

However, Trump tempered those fears on Tuesday, saying: "I have no intention of firing him."

"These comments have given markets a sense of optimism that recent chaos might have peaked and we're heading towards calmer waters," said AJ Bell investment director, Russ Mould.

European stock markets rallied, with Frankfurt and Paris gaining more than two percent, while London advanced over one percent.

Meanwhile, data showed that business activity in the eurozone remained "broadly unchanged" in April as manufacturing held up in the face of US tariffs despite waning confidence for the year head.

In the UK, however, the purchasing managers' index tumbled more than expected to a two-and-a-half year low.

Further comments by Trump indicating a more conciliatory approach to the trade war with China added to the positive market sentiment.

Washington has imposed tariffs of 145 percent on a range of products from China, while Beijing has replied with 125 percent duties on imports from the United States.

But Trump acknowledged that the US levies were at a "very high" level, and that this will "come down substantially".

That came after Treasury Secretary Scott Bessent told a closed-door event in Washington that he expected a de-escalation soon in the United States' tariff standoff with China.

In Asia, Hong Kong surged on the back of a rally in tech firms including Alibaba and Tencent, and Tokyo's stock market also gained.

Taipei jumped more than four percent, helped by a seven percent surge in chip titan TSMC.

However, Shanghai edged down.

Gold, which had hit a record high above $3,500 Tuesday on a rush to safety, retreated to around $3,300 an ounce, while the dollar clawed back some of its recent losses against the pound, euro and yen.

Oil prices were also boosted more than one percent, having taken a recent hit by fears over the economic fallout from the tariffs standoff.

The gains followed rallies of more than two percent for all three main equity indices in New York.

In company news, German software giant SAP saw its share price surge more than 10 percent in Frankfurt trading after its first quarter financial results met analyst expectations.

And Japan's Sumitomo Rubber, which recently bought the Dunlop brand, rose 3.7 percent after it said it would hike tyre prices for US and Canadian cars and small trucks by up to 25 percent.

- Key figures at 1040 GMT -

London - FTSE 100: UP 1.3 percent at 8,434.11 points

Paris - CAC 40: UP 2.1 percent at 7,480.69

Frankfurt - DAX: UP 2.5 percent at 21,832.53

Tokyo - Nikkei 225: UP 1.9 percent at 34,868.63 (close)

Hong Kong - Hang Seng Index: UP 2.4 percent at 22,072.62 (close)

Shanghai - Composite: DOWN 0.1 percent at 3,296.36 (close)

New York - Dow: UP 2.7 percent at 39,186.98 (close)

Euro/dollar: DOWN at $1.1404 from $1.1420 on Tuesday

Pound/dollar: DOWN $1.3305 at $1.3330

Dollar/yen: UP at 141.86 yen from 141.56 yen

Euro/pound: UP at 85.70 pence from 85.67 pence

Brent North Sea Crude: UP 1.2 percent at $68.27 per barrel

West Texas Intermediate: UP 1.3 percent at $64.51 per barrel

K.Sutter--VB