Global stock markets rallied yesterday as optimism from a forecast-busting US jobs report lingered and confidence grew that China and the United States will finally sign off on a mini trade pact.

Investor sentiment was also lifted by British Airways owner IAG, which agreed to buy Spain’s Air Europa for 1.0 billion euros ($1.2 billion), sending its share price more than 1.5 per cent higher in London.

Wall Street also opened higher, building on a strong performance Friday after the Labour Department said the US created 128,000 net new jobs in October, far surpassing the 80,000 expected, while the figure for the previous two months was also revised upwards.

The reading came days after data showed the world’s top economy slowed slightly in July-September but not as much as projected, which suggested it is stabilising.

Earlier in Asia, Hong Kong, Seoul, Bangkok and Taipei each piled on more than one per cent while Shanghai jumped 0.6 per cent.

In Europe, Frankfurt, London, Paris and Milan enjoyed gains of well over one per cent.

The upbeat mood was enhanced by comments from Chinese Vice Premier Liu He that indicated trade talks with Washington were on track.

Liu said he had spoken on Friday to US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, with both sides saying the talks were “constructive”.