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U.S. and Canadian markets are set for a generally positive but mixed opening as investors continue to fret about trade concerns.

On Wednesday, Wall Street fell amid political tensions and trade concerns and industrial stocks, inlcuding Boeing, took the brunt of the fall. Canadian stocks finished flat as energy stock slipped.

Overseas, a break in the recent global trade war squalls helped lift European stocks on Thursday and cooled demand for the markets' traditional safety plays of government bonds and gold.

Solid results from insurance heavyweights Munich Re , Generali and Old Mutual also helped Europe's mood. But it was mainly relief that, for now at least, U.S. President Donald Trump's trade war drum wasn't beating any harder.

China's widely-read and state-run tabloid the Global Times had added to the trade war talk overnight saying the U.S. was trying to play the victim. Germany's economic ministry then said a trade war could "cause tangible damage."

"The big questions the market has is about politics in the United States at the moment and about trade policy," said Julien-Pierre Nouen, Chief Economic Strategist at Lazard Frères Gestion.

"Exporters have been a bit weak and you can see there are some worries about whether other countries will retaliate... but you really have to stick to the economic outlook and in fact we think the economic outlook remains very good."

In Europe, Britain's FTSE was up 0.13 per cent, Germany's DAX added 0.2 per cent and France's CAC was up 0.21 per cent.

Trading was subdued in Asia where Shanghai edged up 0.01 per cent, the Nikkei added 0.12 per cent and Hong Kong's Hang Seng was up 0.34 per cent.

Commodities

Oil prices were broadly steady on Thursday, supported by a pickup in equity markets, but held back by evidence that supply will overtake demand this year.

Global oil demand is expected to pick up this year but supply is growing at a faster pace, leading to a rise in inventories in the first quarter of 2018, the International Energy Agency (IEA) said on Thursday.

"Oil and (the stock market) have been moving hand in hand ... which basically means oil is extremely sensitive to the growth outlook," SEB commodity strategist Bjarne Schieldrop said, adding he still expected demand growth to reach 1.8 million barrels per day (bpd) this year.

The oil price has moved in sync with stocks uninterruptedly for the past 99 trading days, the longest such stretch in two years.

OPEC and several other non-OPEC producers led by Russia began cutting supply in January, 2017 to erase a global glut of crude that had built up since 2014.

The IEA and OPEC both reported a modest rise in global inventory levels in January.

Looming over markets has been a relentless climb in U.S. crude output, which hit another record last week by rising to 10.38 million bpd, up by more than 23 per cent since mid-2016. Commercial crude inventories were up by 5 million barrels, at 430.93 million barrels.

"Surging U.S. output levels will continue to undermine OPEC's efforts for stronger oil prices," said Singapore-based brokerage Phillip Futures in a note on Thursday.

U.S. crude production, which has already overtaken that of top exporter Saudi Arabia, is expected to rise above 11 million bpd later this year, taking the top spot from Russia, according to the IEA.

The IEA believes non-OPEC supply, led by the United States, will grow by 1.8 million bpd this year, while demand will grow by about 1.5 million bpd.

The OPEC cuts combined with rising U.S. output mean OPEC is losing market share.

"In 2018, demand for OPEC crude is forecast at 32.6 million bpd, down by 0.2 million bpd from the previous assessment and 0.2 million bpd lower than a year earlier," OPEC said.

Gold prices on Thursday were steady near a one-week high hit in the previous session amid political tensions between Britain and Russia, and renewed worries about a global trade war.

"Gold has been supported by geopolitical factors as well as dollar weakness ... Stock markets were down overnight, we've got a bit of risk-aversion coming back in," said a Hong Kong based trader.

"The market continues to trade the range with Asian buyers stepping in under $1,320 and speculator profit-taking and producer selling capping the topside around $1,330-$1,335," said MKS PAMP Group trader Alex Thorndike.

"Gold will likely remain range-bound into next week's U.S. Federal Reserve meeting, with the market eagerly anticipating a first rate rise for the year, given the economy's improved data."

Meanwhile, silver rose 0.3 per cent to US$16.54 per ounce and platinum gained 0.2 per cent to US$960.30 per ounce.

Palladium edged 0.2 per cent higher to US$989.30 per ounce after hitting US$1,006.30 an ounce in the previous session, its highest since March 1.

Currencies and bonds

The Canadian dollar slid Thursday, falling closer to the 77 US cent level.

The U.S. dollar  fell against the yen on Thursday as trade tensions encouraged investors to buy the Japanese currency.

Market participants are concerned about a U.S. shift towards increased protectionism under Donald Trump's administration, with Wall Street having fallen on Wednesday after the president sought to impose fresh tariffs on China.

The yen is expected to be the main beneficiary of any increase in trade protectionism, given Japan's strong current account surplus and the currency's reputation as a safe haven.

"There is still uncertainty when it comes to U.S. politics that is keeping risk appetite limited and that is keeping the yen in demand," said Manuel Oliveri, an FX strategist at Credit Agricole.

The yen, which began the year trading around 113 yen per dollar, rose 0.2 per cent to 106.14. In earlier Asian trading it had fallen to 105.79, its strongest since March 7.

The Trump administration is pressing China to cut its trade surplus with the United States by US$100-billion, fanning fears of a broader tit-fot-tat trade war.

Larry Kudlow, the incoming director of the White House national economic council, said on Wednesday that China had earned a tough response from the United States and other countries on trade, even though he has previously criticised "blanket" tariffs.

In an interview with CNBC, Kudlow said he would like to see the dollar a "wee bit stronger than it is currently."

The yield on the U.S. Treasury was slightly lower at 2.809 per cent and the 30-year Treasury was lower at 3.047 per cent. The Canadian 10-year bond was also lower at 2.152 per cent.

Stocks set to see action

Shares of newspaper stocks could take a hit after the U.S. newspaper industry is warning of pain ahead after the U.S. Department of Commerce imposed anti-dumping duties that resulted in tariffs totalling 28.69 per cent on most Canadian producers. "Newsprint is the highest expense item behind payroll," News Media Alliance president David Chavern said in a statement on Wednesday. "Most newspapers will not be able to absorb these increased costs and will be forced to reduce page counts, reduce days of distribution, and/or move more information to digital platforms."

MGA Entertainment Inc. is trying to organize a group of fellow toy makers to make a bid for the Canadian operations of Toys "R" Us Inc., the industry giant that appears to be headed toward liquidation. The group also plans to perform due diligence on Toys "R" Us's U.S. business, with the hope of keeping some of its more than 700 locations open, said Isaac Larian, MGA's founder and chief executive officer.

Magna International Inc. has made a strategic deal that allows it to play a key role in the disruption of the auto industry, signing an agreement with ride-sharing service Lyft Inc. to develop self-driving technology. The Canadian auto parts giant will invest US$200-million in equity in Lyft, which was founded in June, 2012, and began operating its service in Toronto earlier this year.

Dollar General jumped about 9 per cent after the discount retailer's quarterly same-store sales beat Wall Street estimates.

Alexion Pharmaceuticals rose 6 per cent after the company's experimental drug to treat patients with a rare blood disorder met the main goal in a late-stage study.

Exxon shares jumped 1.2 per cent after HSBC upgraded the company's stock to "buy" from "reduce."

Earnings include: Adobe Systems Inc.; Asanko Gold Inc.; AutoCanada Inc.; Broadcom Ltd.; B2Gold Corp.; Element Fleet Management Corp.; Hardwoods Distribution Inc.;  Nautilus Minerals Inc.; Turquoise Hill Resources Ltd.

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Economic News

(8:30 a.m. ET) Canadian ADP employment report for February.

(8:30 a.m. ET) Canada's National Balance Sheet and Financial Flow accounts for Q4

(8:30 a.m. ET) U.S. initial jobless claims for week of March 10. Estimate is 228,000, down 3,000 from the previous week.

(8:30 a.m. ET) U.S. Philadelphia Fed Business Outlook survey

(8:30 a.m. ET) U.S. Empire State Manufacturing survey

(8:30 a.m. ET) U.S. import price for Februrary. Consensus is an increase of 0.3 per cent from January and 3.5 per cent year over year.

(9 a.m. ET) Canadian existing home sales and average prices for February. Estimate is year-over-year declines of 12.0 per cent and 5.0 per cent, respectively

(9 a.m. ET) Canada's MLS Home Price Index for February. Estimate is a rise of 6.0 per cent year over year.

(10 a.m. ET) U.S. housing market index.

(4 p.m. ET) U.S. treasury international capital flows for January.

With files from Reuters and Bloomberg