Hopes rise that lifting tariffs could allow US-China accord

Prospects appear to have brightened for a preliminary breakthrough in the US-China trade war after the two sides agreed to reduce some punitive tariffs on each other's goods as part of an initial agreement.

A Chinese spokesman announced the development Thursday as talks on ending the trade war progressed a development that triggered a rally in US stock markets.

The agreement came during talks aimed at working out details of a "Phase 1" deal that was announced October 12.

Financial markets had been rattled by reports that China was pushing for tariffs to be lifted, which posed the prospect of a breakdown in talks.

Negotiators agreed to a "phased cancellation" of tariff hikes if talks progress, said a Commerce Ministry spokesman, Gao Feng.

"If the two sides achieve a 'Phase 1' agreement, then based on the content of that agreement, tariffs already increased should be canceled at the same time and by the same rate," Gao said at a news briefing.

As for the size of reductions, Gao said that would depend on the agreement.

"For almost two years now, the US/China trade tussle has posed the biggest headwind to global growth," BMO Economics said in a research note.

"But with promising signs of progress on the trade front, a shift in global central banks to easing ... and mostly better-than-expected corporate profits, US stocks" are reaching all-time highs."