Markets edge higher on hopes US and China can resolve Trump tariff row -as it happened

Investors still edgy on fears of a full blown trade war between world's two largest economies

2.46pm BST

The US markets have made a bright start after last week's rout following news that the US planned to impose $60bn of tariffs on Chinese imports.

Investors have turned slightly more positive on hopes that the US and China could resolve the row before it turned into a full blown trade war, following positive comments over the weekend from US treasury secretary Steve Mnuchin. S&P said we were not in a trade war yet but much would depend on China's plans for retaliation to the $60bn worth of sanctions announced by Donald Trump last week.

1.47pm BST

Ahead of the US market open, a positive bit of economic data.

The Chicago Fed's national activity index has jumped from +0.02 in January to +0.88 in February. January's figure was however revised down from +0.12.

1.40pm BST

Speaking of Brexit, Moody's Investors Service says the agreement between the UK and the EU on the terms of a transition arrangement is positive but there is still much uncertainty. In a report just published, it said:

The agreement provides clarity that is credit positive for a broad range of UK issuers because it extends the narrow time frame that is available to shape and implement a new trade agreement and regulatory regimes with the EU until existing common rules cease to apply. It also buys the UK limited time to negotiate free trade agreements (FTAs) with other countries.

However, the agreement remains conditional on the UK and the EU overcoming other challenges, such as the need to find a solution that prevents the creation of a hard border between Ireland and Northern Ireland.

12.45pm BST

With a year to go until Britain leaves the European Union, there are a host of unresolved issues facing business. Dan Roberts has been taking a look:

Related: 'Businesses need answers fast': uncertainty clouds the picture a year from Brexit

12.28pm BST

In the currency markets, the pound is edging higher against both the dollar and euro.

Against the dollar it is up 0.6% at $1.4223 while against the euro it is up 0.17% at a1.1458. The single currency is also benefiting from dollar weakness. All this is helping limit the gains in European stock markets, says Mike van Dulken, head of research at Accendo Markets:

Equities have started the week on the front foot, with reports of US-China talks helping ease the trade war fears which pushed equities lower last week, as well as Trump signing rather than vetoing a US government spending bill. That said, US dollar weakness, and thus pound and euro strength, is keeping equity bullishness in check, holding indices from breaking back above key levels, to inspire confidence in a turnaround.

12.15pm BST

Europe should create a rainy day fund to help any countries that get into financial difficulties in the future, said IMF managing director Christine Lagarde.

In a speech in Berlin she said:

[A new IMF paper] proposes creating a "rainy-day fund" that countries contribute to each year to build up assets in good times.

Then, depending on the depth of a downturn countries would receive transfers to help them offset budget shortfalls.

11.57am BST

European markets are managing to hold onto their early gains.

The FTSE 100 is currently up 0.4%, Germany's Dax is 0.5% higher and France's Cac has climbed 0.24%. On Wall Street, the futures are suggesting the Dow Jones Industrial Average will open more than 300 points higher.

11.16am BST

Here's the latest update from the receivers at collapsed construction giant Carillion.

Another 123 employees have lost their jobs and will leave the business later this week.

More than 6,400 employees are currently retained to enable Carillion to deliver the remaining services it is providing for public and private sector customers until decisions are taken to transfer or cease these contracts.

Discussions with potential purchasers continue. I am continuing to engage with staff, elected employee representatives and unions to keep them informed as these arrangements are confirmed.

10.52am BST

Back in the corporate world, and excitement in the paper and packaging realm.

Ireland's Smurfit Kappa has seen its shares drop by nearly 4%, making it the biggest faller in the FTSE 100, after it rejected an increased a9.5bn offer from US rival International Paper.

The revised proposal does not offer Smurfit Kappa shareholders much more than compensation for the fall in International Paper's share price since [the first offer] and again entirely fails to value the group's true intrinsic business worth and future prospects.

Today's [share price] reaction suggests concern among Smurfit holders (sitting on still handsome 20% profits versus 2018's average) that IP's new 15% higher cash component is merely aimed at offsetting the now lower valued share component, and that the meagre 3% boost to the aggregate offer means it is unprepared to go much if any higher. The other worry is that Smurfit will continue to hold out for improved terms which may never materialise. In which case, shareholders are cashing out as close to the top as they can.

Those hanging on may be expecting a second revision from IP before it gives up. And history tells us this could well happen. The second bid does, after all, show willingness to maintain the bid's 67% cash value to Smurfit shareholders. However, given Smurfit's second rejection, and unless any third offer is for something closer to recent record highs (10% higher), it may not prove enough to convince management and shareholders alike to agree to tender. Especially given the risk that the value of the 32% share component worsens further, assuming the deal requires at least some anti-trust approval.

10.19am BST

Apart from the hopes that the US and China can avert an all out trade war, markets have also been buoyed by news that South Korea has been granted an indefinite exemption from steel and aluminium tariffs.

The US has already given the European Union a temporary extension, something the bloc is hoping to make permanent.

It is a calm morning after the stormy atmosphere of last week. US futures have raced higher on weekend reports that the US and China are working towards a possible deal that improves access for US firms.

With equity markets so heavily beaten down last week, a rebound was a definite possibility, the only questions are how long it lasts and how far it goes. Churchill's observation that 'to jaw jaw is better than to war war' applies to these tariff battles as well. The decision to exempt key US allies from the tariffs is a sign that the White House is not as dogmatic as the rhetoric appears, and should give negotiators room for manoeuvre.

9.37am BST

A new snapshot of the UK housing market shows mortage approvals fell by 11% in February to 38,120 compared to January, but were up 4.9% on a year ago.

But according to UK Finance, net mortgage lending rose by 1.643bn compared to 1.038bn in January.

There has been an increase in remortgage approvals compared to last year, as borrowers look to lock in to attractive deals amid speculation of further interest rate rises later this year.

We are also seeing a continuing rise in credit card spending, reflecting the growing number of transactions carried out using cards, while other forms of borrowing such as overdrafts continue to fall.

9.09am BST

Despite the US tariffs to be imposed on Chinese products, we are not in a trade war - yet. That's the view of S&P Global Ratings:

President Trump's long-threatened package of trade sanctions on China has landed, but a trade war isn't yet inevitable. In general, the threatened tariffs and investment restrictions on China won't likely cause deep pain to the Chinese economy, nor will they have a material impact on corporate borrowers in either country.

However, S&P Global Ratings believes China's response will be the key determinant on what happens next. So far China's response has been relatively measured, indicating potential tariffs on about $3 billion of U.S. imports. But will China take additional retaliatory action?

8.52am BST

Back in the corporate world, and the US has proved a step too far for many UK retailers, even such big names as Marks & Spencer and Tesco. Still, this has not stopped highly rated JD Sports from taking the plunge. Reuters has the details:

British sports and fashion retailer JD Sports Fashion said on Monday it has agreed to buy US firm The Finish Line for $558m (396m), boosting its presence in the world's largest sportswear market.

JD Sports has exploited growing demand for branded sports shoes and clothes to overtake Sports Direct as Britain's leading sportswear retailer by market value and in recent years has also been expanding overseas.

8.44am BST

Despite the moves higher in Europe, markets remain edgy, says Hussein Sayed, chief market strategist at FXTM:

US Treasury Secretary Steven Mnuchin commented over the weekend that he is cautiously optimistic that an agreement would be reached between the U.S. and China, and this would likely calm the markets when the U.S. trading session kicks off. However, the longer the "wait and see" mode lasts, the more pressure will be felt in the equities market. After all, many companies will need to adjust their expansion and capital spending plans according to the new developments. This will certainly impact investor's confidence and risk global economic growth, which has been the key pillar of the nine-year-old bull run.

8.28am BST

Positive signs from the French economy are also giving some support to European markets.

The country's GDP grew by 0.7% in the fourth quarter compared to the previous three months, better than the 0.6% originally estimated. The estimate for 2017 as a whole remained at 2%, according to the INSEE statistics agency.

8.11am BST

It's a nervy start to trading in Europe, but markets have managed to edge higher despite the continuing tariff tensions. Investors are hoping the suggestion that the US and China are in discussions behind the scenes might avoid a full blown trade war between the two.

So the FTSE 100 is up 0.21%, Germany's Dax has added 0.3% and Italy's FTSE MIB is 0.29% better.

7.54am BST

Uber has announced a deal to regroup its operations in south-east Asia:

Ride-hailing firm Uber has agreed to sell its south-east Asian business to bigger regional rival Grab, marking the US company's second retreat from an Asian market.

The deal is the industry's first big consolidation in south-east Asia, home to about 640 million people, and puts pressure on Indonesia's Go-Jek, which is backed by Alphabet's Google and China's Tencent.

Related: Uber to sell south-east Asia business to competitor Grab

7.46am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Donald Trump's plans to impose $60bn worth of tariffs on China - on top of wider sanctions on steel and aluminium - raised fears of a trade war between the world's two largest economies and sent shivers through global stock markets.

Related: Asian shares battered by trade war fears but US signals willingness to talk

European Opening Calls:#FTSE 6918 -0.06%#DAX 11900 +0.12%#CAC 5097 +0.03%#MIB 22295 +0.03%#IBEX 9400 +0.07%

As we come to the end of this first quarter of 2018 all of the optimism that we saw at the end of January now appears to be an almost distant memory, and it will need a significant change of tone to prevent stock markets finishing this quarter lower, despite this year's record highs.

China's initially measured response to last week's announcement of tariffs to the US administrations announcement does appear to offer some hope in terms of a possible stabilisation this week, but sentiment is likely to remain volatile, particularly if Chinese authorities follow up with further large scale measures which target, larger US corporations like Boeing or Apple. US treasury secretary Steve Mnuchin's comments at the weekend that he was cautiously optimistic that a US agreement with China could be reached also offers hope that some form of accommodation can be reached in the coming days or weeks.