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Equities recover on trade hopes; UK PM resignation sends pound higher

➤ This week saw equities battered by mounting trade tensions

➤ Markets focusing on UK and Italy in ongoing European Parliament elections

Mumbai Sensex jumps as India's Narendra Modi gets 2nd term in office

Global stocks recovered May 24 ahead of a long weekend in the U.S. and U.K., ending a week that saw equities battered by the escalating trade war between the U.S. and China. Meanwhile, U.K. Prime Minister Theresa May said she will step down June 7, sending the pound higher.

U.S. President Donald Trump said there was a "good possibility" of renewing trade negotiations with China and that Huawei Technologies Co. Ltd. could be included in a potential trade deal with China, the Financial Times reported. Trump also announced plans for $16 billion in aid for farmers impacted by the trade war.

Wall Street opened higher May 24, having closed down more than 1% May 23.

In Europe, Germany's DAX index was up 0.8% and France's CAC 40 and the U.K. FTSE 100 added 0.9% around 9:30 a.m. ET on May 24.

The Shanghai SE Composite was broadly flat, while Hong Kong's Hang Seng index added 0.3%. Japan's Nikkei 225 index closed 0.2% lower, as annual inflation in the country accelerated to 0.9% in April.

The Mumbai Sensex gained 1.6% as Indian Prime Minister Narendra Modi secured a second term in office.

In currencies, sterling reversed some of the earlier gains and was up 0.1% around 9:30 a.m. ET as May said she will step down as leader of the Conservative party in June, triggering a leadership contest for the next party leader and prime minister. May was under mounting pressure to step down in recent days after failing to find support for a fourth vote on her EU withdrawal agreement. Opinion polls show she is most likely to be replaced by Boris Johnson.

The U.K. government already postponed the publication of its new Brexit legislation, and May will continue to serve as a caretaker prime minister until her successor is named.

The U.K. is most likely to head to a general election later in 2019 or in early 2020 as May's successor may fail to deliver Brexit, with or without a deal, according to Citi analysts.

The euro was up 0.1% and the Japanese yen fell 0.1% against the dollar.

Meanwhile, markets await the results of the European Parliament elections May 26, which "are likely to show a more fractured European landscape," Citi added. In addition to the U.K., markets will be focusing on Italy, whose Deputy Prime Minister Matteo Salvini has indicated willingness to break the EU's borrowing limits. Salvini's party is projected to perform well in the elections.

Italian bonds gained as 10-year yields lost 8 basis points around 9:30 a.m. ET. Ten-year U.S. yields on Treasurys were broadly stable at 2.327%.

In commodities, Brent crude oil jumped 1.5% to $68.76 per barrel on the ICE Futures Exchange, having fallen below $70 per barrel yesterday amid global macro concerns. Warren Patterson, head of commodities strategy at ING Research, said further weakness in oil prices could send the wrong message to the market, leading to the OPEC and its allies continuing production cuts into the second half of 2019, Patterson added.

Gold fell 0.1%.

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