World stock markets rallied yesterday as US and Chinese officials geared up for crunch trade talks aimed at averting fresh tariff escalations that have triggered fears of a global economic slowdown.

European equities shrugged off last week's losses to chase Asia higher and Wall Street followed their lead as a new round of high-stakes talks gets under way to resolve the festering trade row.

US negotiators met with their Chinese counterparts for preliminary discussions in Beijing yesterday, buoying hopes of deal.

"European stocks have rallied... as traders are hopeful about the next round of trade talks between the US and China," said CMC Markets analyst David Madden.

"Given that both sides are still far apart, there is no guarantee that the discussions will be successful, and dealers' optimism might be wishful thinking."

London's benchmark FTSE 100 rose after an announcement that UK economic growth has slowed weighed on the pound, lifting stocks in multinationals that have earnings in foreign currency.

With Brexit looming next month, the British economy grew by 1.4 per cent last year, data showed. That was the lowest level for six years and down from 1.8 per cent in 2017.

But Asian equities experienced sizeable gains yesterday on resurgent investor optimism.

"It's shaping up to be another big week for the United States, with the government on the verge of another shutdown and trade talks continuing with China," said Oanda analyst Craig Erlam.

Markets had mostly fallen on Friday after a tumultuous week that was dented by continued uncertainty over slowing world economic growth and the global trade war.

Mainland Chinese markets rebounded yesterday after the Lunar New Year break despite a bleak IMF warning over the global growth outlook.

Top US economic officials will travel to the Chinese capital this week for the third round of talks on Thursday and Friday, but deputies had already arrived and the White House said preparatory discussions were to begin Monday.

Failure to agree a deal between the two economic superpowers before March 1 would see punitive US duties on $200 billion in Chinese goods more than double.

Analysts say imposition of the tariffs could further sap the strength of the global economy.

Over the weekend, the International Monetary Fund warned governments to prepare for a possible global economic ‘storm’ as growth forecasts dip. It cited the trade row as one of four ‘clouds’ overshadowing the global economy, along with Brexit uncertainty, the accelerated slowdown in China and financial tightening.

"We see an economy that is growing more slowly than we had anticipated," IMF chief Christine Lagarde said.

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