By Sinéad Carew
NEW YORK (Reuters) – World shares climbed on Friday but were on track for their biggest weekly decline in three months due to trade war fears, though oil prices surged after OPEC decided on a modest production increase.
U.S. Treasury yields edged higher, trading in narrow ranges as risk appetite improved a bit but worries over a trade conflict with China kept investors cautious.
The euro rose on Friday as traders were encouraged by an improvement in regional growth data and assurance by Italian politicians that their nation would not leave the economic bloc.
The pan-European FTSEurofirst 300 index <.FTEU3> rose 1.14 percent and MSCI’s gauge of stocks across the globe <.MIWD00000PUS> gained 0.56 percent. But the global index registered its biggest weekly drop for three months.
“It’s not like stocks are getting a major bounce. It’s a little stop of the bleeding. We’re taking our breath and focusing on the oil market,” said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
“Oil is the bigger story today with the OPEC news,” he said.
On Wall Street, the Dow Jones Industrial Average <.DJI> rose 170.44 points, or 0.7 percent, to 24,632.14, the S&P 500 <.SPX> gained 11.96 points, or 0.43 percent, to 2,761.72 and the Nasdaq Composite <.IXIC> dropped 9.35 points, or 0.12 percent, to 7,703.60.
The energy sector was the benchmark S&P 500 index’s <.SPX> biggest percentage gainer as oil prices rose sharply after OPEC agreed to only a modest increase in output to compensate for losses in production at a time of rising global demand.
“The effective increase in output can easily be absorbed by the market,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas, told the Reuters Global Oil Forum.
However, investor nervousness over a possible full-blown trade war deepened this week over increasingly sharp rhetoric between the United States and China, and growing evidence of the wider economic impact of this conflict.
Chinese state media said on Friday that U.S. protectionism was self-defeating and a “symptom of paranoid delusions” that must not distract China from its path to modernization.
European and U.S. car makers’ shares fell sharply after U.S. President Donald Trump threatened to impose a 20 percent tariff on all European Union-assembled cars coming into the United States, if EU “tariffs and trade barriers” are not removed..
The dollar index <.DXY>, tracking it against six major currencies, fell 0.04 percent, with the euro
The Japanese yen strengthened 0.03 percent versus the greenback at 109.99 per dollar.
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Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> rose 0.4 percent after touching its lowest point since December in the session. It fell 2 percent for the week.
In China, the Shanghai composite index rose 0.5 percent but was down 4.4 percent for the week, its steepest weekly drop since Feb. 9.
(Reporting by Ritvik Carvalho; additional reporting by Saikat Chatterjee; Editing by Bernadette Baum)