Stock markets jumped yesterday on hopes of a breakthrough in the US-China trade war.

The dollar mostly rose, while oil prices rallied on news that OPEC crude output hit a four-year nadir.

The pound weakened after official data showed UK inflation hit a two-year low and as the Brexit impasse drags on without a breakthrough in sight.

In the US, President Donald Trump said he may extend his trade deal deadline with Beijing, while a report claimed his Chinese counterpart Xi Jinping would meet with top US officials,boosting the prospects of an agreement.

High-level talks are due to begin in the Chinese capital tomorrow aimed at an accord to stop sharp US tariff hikes that could damage the global economy.

Trump said he could let his March 1 deadline for the tariffs "slide for a little while" if a meaningful deal was close, adding that he expects a summit with President Xi "at some point".

Later, a report in the South China Morning Post said Xi would personally meet the US delegation in Beijing, suggesting a redoubled effort to make progress on a deal.

Washington is demanding changes from Beijing on what it says are unfair commercial practices. A resolution would prevent US tariffs more than doubling on $200 billion in Chinese imports next month. 

Tokyo stocks added a further 1.3 per cent after Tuesday's gains to finish at a two-month high.

Hong Kong rose 1.2 per cent, and Shanghai earned 1.8 per cent on the news, following Wall Street's lead.

European equities also climbed, with London up 0.6 per cent, Paris 0.3 per cent and Frankfurt 0.2 per cent nearing the half-way stage.

However, some analysts struck a cautious tone, noting that much work needs to be completed before a framework agreement is in reach.

Elsewhere Sydney shed 0.3 per cent, with calls for a snap election amid political tensions over refugees adding to underwhelming corporate earnings and subdued metal prices.

The New Zealand dollar soared 1.5 per cent as the central bank held interest rates unchanged and forecast no moves until 2021.

Renewed global investor confidence saw a movement away from the greenback to riskier currencies.

The pound moved upwards past $1.29, despite no-deal Brexit fears as Prime Minister Theresa May was accused by the opposition of "running down the clock" and "playing chicken" with Brussels over talks.

Trump's suggestion that another chaotic US government shutdown was now unlikely following a deal struck in Congress over border security further fuelled risk appetite.


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