European stocks advance as trade optimism takes hold

LONDON — Stock markets in Europe climbed on Friday as fresh optimism about US-China trade talks took hold, analysts said.

The pound hit near four-week lows against the dollar amid Brexit uncertainty.

London stocks were the continent's top performer by the close, boosted by the weaker currency.

A report by CNBC saying that US-China trade talks are to resume on October 10 was well received as it matched the market's narrative seen in recent sessions, analysts said.

Trade optimism "is overshadowing ramped-up political noise in Washington and global growth uncertainties", said analysts at Charles Schwab.

Smiling faces 

But while "Europe kept a smile plastered on its face", US markets were more reticent, said Connor Campbell at Spreadex. The Dow index kicked the New York session off on a stronger note, but then slipped into negative territory.

However, Forex.com analyst Faward Razaqzada suggested US markets were ready for a breakout after absorbing so much negative news recently.

"What can't break you makes you stronger," he said.

A move towards easier central bank monetary policy was helping sentiment, he said.

Bank of England board member Michael Saunders appeared to open the door to a rate cut, said Fiona Cincotta, senior market analyst at City Index trading group.

Pound tanks 

But the very same factor boosting stock sentiment caused the pound to "tank", she said.

"The comments from Saunders highlight the marked weakening of the UK economy over recent quarters, dragged down not only by Brexit uncertainty but also softer global growth," Cincotta added.

The pound fell to $1.2271, the lowest point in nearly four weeks, before clawing back some of its losses. 

The weaker sterling pushed up share prices of multinationals listed on London's benchmark FTSE 100 index.

In commodities, crude prices steadied, having slipped earlier following the swift recovery in Saudi production that slumped in the wake of attacks on its oil infrastructure two weeks ago.