USA stocks rallied more than 1% on Thursday, buoyed by gains in the trade-sensitive technology and industrial sectors as China expressed hope on trade negotiations with the United States, easing concerns that rising tensions could stoke a recession.
Stocks finished with broad gains on Wall Street Thursday, driving the Dow Jones Industrial Average more than 300 points higher.
The tech-heavy Nasdaq was up 0.3 per cent at 7,996.53.
Analysts and investors said the gains were driven in part by optimism on the prospects for face-to-face talks in Washington next month among representatives of the world's two biggest economies. Retailers also did well.
US stocks were mixed after the close on Friday, as gains in the, and sectors led shares higher while losses in the, and sectors led shares lower.
The United States and China had given hopeful signs on trade on Thursday as they discussed the next round of in-person negotiations in September.
More than half of the 30 blue-chip stocks in the Dow extended gains around midday, with shares of trade-sensitive Intel up over 1.3 per cent, leading the gainers.
Major stock indexes in Europe also closed broadly higher. The indexes are still sitting within about 4% of their records.
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With an array of apparel, electronics and sporting goods from China set to be hit with levies of 10% beginning September 1, analysts said some investors were increasing their positions in defensive corners of the stock market this month as a way to shield their portfolios.
The three main indexes are on track to wrap up the week with the biggest gains since June, after coming under huge selling pressure for much of the month due to escalating trade tensions and fears of a looming recession.
"The global economy is slowing, and the question is whether trade will tip that into a global recession or whether or not it will just be a garden-variety slowdown", said Jason Katz, senior portfolio manager at UBS Wealth Management USA.
A number of companies, including electronics retailer Best Buy Co Inc BBY.N and teen apparel retailer Abercrombie & Fitch Co ANF.N , reported results earlier on Thursday and warned of the impact from tariffs. USA gross domestic product - the broadest measure of the nation's output of goods and services - rose at a seasonally adjusted annual rate of 2% in the second quarter, compared with the previous estimate of a 2.1% rise. The figure was lower than the government's initial estimate a month ago of 2.1% growth.
Meanwhile, U.S. jobless claims rose slightly to 215,000 last week, though the figure remains at a historically low level.
The yield on the 10-year Treasury rose to 1.50% from 1.47% late Wednesday.
Bond prices fell. The yield on the 10-year Treasury rose to 1.52%.
Elsewhere, the Stoxx Europe 600 rose 1%. JPMorgan climbed 2.3%, American Airlines Group gained 3.9% and Facebook rose 2.1%.
The top performers on the S&P 500 were Western Digital Corporation (NASDAQ:) which rose 3.98% to 57.27, Dollar Tree Inc (NASDAQ:) which was up 3.95% to settle at 101.53 and Campbell Soup Company (NYSE:) which gained 3.90% to close at 45.00.