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North American stock markets gained on Wednesday on a report that China could yet agree to a partial trade deal with the United States despite recent tensions, while the prospect of a last-minute Brexit agreement between the European Union and Britain seemed as remote as ever.

Sterling was little changed against the U.S. dollar after losing nearly 1 per cent over the past two sessions.

China is still open to agreeing to a partial trade deal, Bloomberg reported on Wednesday, despite the recent U.S. blacklisting of Chinese technology firms and reports on visa restrictions from both sides.

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“You don’t want to ignore headlines, but at the same time each headline seems to say the same thing - that both sides want to see something happen and both sides are encouraged that something may happen,” said Michael Lorizio, senior fixed income trader at Manulife Investment Management in Boston.

Markets have been wobbly this month on more evidence that the U.S.-China conflict over trade is increasingly damaging the global economy. Stocks have been particularly sensitive to headlines regarding trade.

“Investors are hoping for an interim deal, they aren’t expecting anything big, but are cautiously optimistic,” said Michael Geraghty, equity strategist at Cornerstone Capital Group.

On Wall Street, the Dow Jones Industrial Average rose 182.24 points, or 0.7 per cent, to 26,346.28, the S&P 500 gained 26.41 points, or 0.91 per cent, to 2,919.47 and the Nasdaq Composite added 79.96 points, or 1.02 per cent, to 7,903.74.

In Toronto, the S&P/TSX composite index was up 85.92 points, or 0.53 per cent, at 16,379.87.

Eight of the index’s 11 major sectors were trading higher.

The energy sector fell 0.4 per cent as crude prices were up, while the materials sector, which includes precious and base metals miners and fertilizer companies, was down 0.5 per cent

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The financials sector gained 0.7 per cent, and the industrials sector rose 1.2 per cent.

Leading the index were Gran Tierra Energy Inc., up 6.4 per cent, Ag Growth International Inc., up 6.1 per cent, and Ballard Power Systems Inc., higher by 3.6 per cent.

Lagging shares were Semafo Inc., down 5.2 per cent, Wesdome Gold Mines Ltd., down 3.9 per cent, and Exchange Income Corp., lower by 3.6 per cent.

The pan-European STOXX 600 index rose 0.42 per cent and MSCI’s gauge of stocks across the globe gained 0.60 per cent.

Emerging market stocks lost 0.03 per cent, while Nikkei futures rose 1.2 per cent.

Talks between the European Union and Britain over an agreement regarding London’s departure from the EU on Oct. 31 appeared to be going nowhere.

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British lawmakers have voted to force Prime Minister Boris Johnson to seek an extension to the departure date if he cannot agree a deal, but the prospect of further prolonged political uncertainty is worrying investors.

Sterling was recently at $1.2213, down 0.03 per cent on the day after falling 0.93 per cent over the two previous sessions.

The dollar index fell 0.02 per cent, with the euro up 0.16 per cent to $1.0972.

The Japanese yen weakened 0.39 per cent versus the greenback at 107.52 per dollar.

The Turkish lira touched a near four-month low versus the dollar after Ankara launched a military operation against Kurdish fighters in northeast Syria just days after U.S. troops pulled back from the area.

The Turkish currency lost 0.47 per cent versus the dollar at 5.86.

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In bond markets, U.S. Treasury yields rose as investors happy to take on some more risk sold out of safer assets. A flood of supply also weighed on U.S. bond prices.

Benchmark 10-year notes last fell 11/32 in price to yield 1.5768 per cent, from 1.539 per cent late on Tuesday.

Ecuadorian bonds tumbled as protesters began a national strike after President Lenin Moreno refused to step down or overturn anti-austerity measures that have triggered the worst unrest in a decade.

Spot gold added 0.2 per cent to $1,507.60 an ounce. U.S. gold futures gained 0.61 per cent to $1,513.40 an ounce.

Oil prices edged up on Wednesday as Turkey launched an offensive in Syria that could disrupt crude production in the region and on hopes of progress in ending the U.S.-China trade war, but a build in U.S. crude inventories limited gains.

U.S. crude rose 0.23 per cent to $52.75 per barrel and Brent was last at $58.44, up 0.34 per cent on the day.

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Turkey launched a military operation against Kurdish fighters in northeast Syria on Wednesday, President Tayyip Erdogan said, adding the offensive was aimed to eliminate a “terror corridor” along the Turkish border.

Analysts say the attacks could impact the economy of the oil-producing Kurdistan region in Iraq and boost energy prices.

Prices pared gains after U.S. President Donald Trump said the assault on Syria was “a bad idea” not backed by his administration.

Growing U.S. crude stocks also limited oil prices. Crude inventories grew more than expected last week, rising by 2.9 million barrels, compared with analysts’ expectations for an increase of 1.4 million barrels, the Energy Information Administration said.

Reuters

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