Asian markets rose Tuesday on growing optimism that China and the US will sign a partial trade deal next month, while the pound dipped slightly as dealers await another key Brexit vote in Westminster.
Donald Trump reinforced hopes Monday that he and Xi Jinping will be able to put pen to paper on a mini pact, saying China had already started promised purchases of farm goods, and that the first part of a wider commitment was almost complete.
"We'll be able to, we think, sign a completed document with China on phase one," Trump said at the White House, adding they would then move on to the next phases.
Trade Representative Robert Lighthizer said efforts were being made for it to be ready when the leaders meet at the APEC summit next month in Chile.
And Trump's economics adviser Larry Kudlow indicated tariffs planned to go into effect in December could be cancelled if the talks go well.
Increasing signs of progress in the 18-month trade war provided some much-needed relief to global markets, with all three main indexes on Wall Street ending higher and Asia taking up the lead.
Hong Kong rose 0.2 per cent, Shanghai ended up 0.5 percent and Sydney gained 0.3 per cent.
Singapore put on 0.9 per cent and Seoul rallied more than one per cent. Wellington, Taipei, Manila and Mumbai were also higher, while Tokyo was closed for a holiday.
"Unlike previous trade talks where expectations centred on the view that something is better than nothing, this time around there appears to be a tangible and workable roadmap in place," said AxiTrader senior market analyst Stephen Innes.
He said this was "supported by official confirmation that the US and China were both on the same page about the intent to work towards phase one of a 'deal' by mid-November".
The "fact that phase two is even being discussed at this time... suggests that both the US and China may have finally found a bridge that isn't too far".
Traders are also keeping watch on events in London, where Boris Johnson will try on Tuesday to push his Brexit deal with the EU through parliament before next Thursday's deadline.
Sterling rallied Monday to USD 1.3013 -- its highest since May -- but ticked back after House of Commons Speaker John Bercow refused the prime minister's request to put his bill to MPs.
On Tuesday it extended losses against the dollar and euro.
While many lawmakers say they need more time to read through the details, there is a growing expectation the government can muster enough support to eventually push the bill through later Tuesday.
Still, with the vote likely to be tight, traders are moving cautiously.
"The prospect of an extension (to the October 31 deadline for leaving the EU) has continued to support the pound," said Michael Hewson, chief market analyst at CMC Markets UK.
"For now, this appears to be acting as a short-term top, with markets reluctant to drive the currency too much higher given that there could be many more political twists and turns before any deal gets across the line."
In early trade London and Paris were flat, while Frankfurt slipped 0.3 per cent.
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