European stock markets recovered yesterday but concerns about the Huawei row and broader China-US trade war kept investors on edge.

The pound, meanwhile, tumbled on lingering Brexit turmoil, before bouncing back.

Against sterling, the European single currency reached a three-month high at 87.89 pence. The pound also hit a four-month low at $1.2685.

European shares had fallen heavily Monday, as did New York’s tech-rich Nasdaq, after Google said it was beginning to sever ties with Chinese telecoms giant Huawei, days after US President Donald Trump’s decision to bar it from the US market.

The Huawei development – with the US citing national security concerns – has muddied the waters in the tariffs stand-off between Washington and Beijing, which was thought to have been close to conclusion at the start of the month.

Some observers are now warning that stalled talks between the economic superpowers might not see any progress before a hoped-for meeting between Mr Trump and Chinese counterpart Xi Jinping at the G20 summit in June.

“The market was a little optimistic that a trade deal would just get done here this month,” Brett Ewing, chief market strategist at First Franklin Financial Services, told Bloomberg News.

Dealers have “definitely come to terms with a longer-term trade negotiation process”.

While the Commerce Department issued a 90-day reprieve on the ban on dealing with Huawei, saying breathing space was needed to avoid huge disruption, the two appear to be digging their heels in.

The developing crisis had a mixed impact on Asia’s tech firms, with Samsung Electronics, a rival to Huawei in the smartphone market, rallying 2.7 per cent.

Analysts say the US ban will damage Huawei’s ability to sell phones outside China, offering Samsung a chance to consolidate its position at the top of the global market.

In commodities trading, oil prices were mixed after producers said supplies were sufficient and stockpiles still rising.