US sits out stock market rally after report of more Trump tariffs

Investors hope fresh talks will avert an all-out US-China trade war

Wall Street stocks treaded water Friday after a fresh report of new US tariffs on Chinese imports blunted enthusiasm about new negotiation possibilities that had lifted equities in Europe and Asia.

After a positive open, US stocks veered into negative territory at midday following a Bloomberg News story that President Donald Trump still planned to go ahead with new tariffs with China, despite another effort at negotiations with Beijing launched by Treasury Secretary Steven Mnuchin.

The Bloomberg report came after most leading European and Asian bourses rallied on news of the Mnuchin effort.

An exception was Shanghai, which fell after Chinese government data showed the pace of investment slowing to record lows.

US stocks, for their part, worked themselves back to near flat by the session close, the latest sign investors are taking Trump trade threats with a grain of salt.

"This is part of the president's negotiating playbook and should not be a surprise for the market," said Quincy Krosby, chief market strategist at Prudential Financial.

At the end of a week dominated by monetary policy decisions, there was also relief that central banks in emerging economies were actively helping their currencies, after unexpectedly sizeable interest rate increases in Turkey and Russia.

Tepid US inflation data this week also boosted the prospects for emerging economies that have large dollar-denominated debt.

While the US central bank is expected to lift rates later this month, modest US inflation lessens the odds the Fed will hasten its tempo of increases beyond the current "gradual" pace.

"Hope springs eternal for emerging markets anytime the US dollar weakens," said Stephen Innes, head of Asia-Pacific trading at Oanda trading group.

The dollar, however, recovered throughout Friday's session following statements from Fed officials Friday whose "hawkish" comments also lifted the 10-year US Treasury yield to 3.0 percent, said Kathy Lien of BK Asset Management.

- Key figures around 2030 GMT -

New York - Dow Jones: UP less than 0.1 percent at 26,154.67 (close)

New York - S&P 500: UP less than 0.1 percent at 2,904.98 (close)

New York - Nasdaq: DOWN 0.1 percent at 8,010.04 (close)

London - FTSE 100: UP 0.3 percent at 7,304.04 points (close)

Frankfurt - DAX 30: UP 0.6 percent at 12,124.33 (close)

Paris - CAC 40: UP 0.5 percent at 5,352.57 (close)

EURO STOXX 50: UP 0.3 percent at 3,344.63 (close)

Tokyo - Nikkei 225: UP 1.2 percent at 23,094.67 (close)

Hong Kong - Hang Seng: UP 1.0 percent at 27,286.41 (close)

Shanghai - Composite: DOWN 0.2 percent at 2,681.64 (close)

Euro/dollar: DOWN at $1.1627 from $1.1690 at 2100 GMT

Pound/dollar: DOWN at $1.3069 from $1.3109

Dollar/yen: UP at 112.00 yen from 111.92 yen

Oil - Brent Crude: DOWN 9 cents at $78.09 per barrel

Oil - West Texas Intermediate: UP 40 cents at $68.99 per barrel