In This Article:
* Fears Chinese trade surplus could inflame dispute
* Oil drops four percent this week
* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
By Tom Finn
LONDON, July 13 (Reuters) - World stocks rose for a second consecutive week on Friday as investors prepared for an expected run of strong earnings in the United States, although fears about the U.S.-China trade conflict kept gains in check and pushed the dollar higher.
Expectations of a bumper U.S. earnings season and news that China's overall global export growth beat expectations led European shares up on Friday with industrials and technology sending the pan-European STOXX 600 up 0.2 percent.
Markets appeared broadly risk-friendly as a weakening safe-haven yen helped lift Japan's Nikkei stock index two percent. That followed the S&P500 hitting four-month highs on Wall Street overnight.
Yet fears about the impact of an escalating U.S.-China trade war continue to cloud the outlook.
Chinese trade data showed its trade surplus with the United States swelling to a record in June and some fear that could further inflame a trade dispute with Washington.
"The record surplus with the U.S. will inevitably get top billing... China's exporters have been front-loading exports to beat the imposition of tariffs, implying a relatively sharp drop in coming months," ADM Investor Services market strategist Mark Otswald said.
With investors braced for the impact of tit-for-tat tariffs, one of China's main indexes edged lower and China’s yuan headed for its fifth straight week of losses.
While China has vowed to retaliate to the proposed new U.S. tariffs - 10 percent on $200 billion of Chinese goods - the lack of a specific response to date has sparked global relief.
On Friday, S&P500 e-mini futures rose to a five-month high on expectations of solid earnings growth among U.S. firms despite the trade war concern.
RENEWED TALKS?
Offering some reassurance to investors spooked by trade war fears, U.S. Treasury Secretary Steven Mnuchin said on Thursday the U.S. and China could reopen trade talks if Beijing was serious about structural reforms of its business practices.
"Some have suggested that Chinese officials are easing back their rhetoric with the intention of going back to the negotiation table, perhaps in light of increased concerns about economic impacts," ANZ analysts wrote in a note on Friday.
The options available to Beijing include boycotting American goods, selling off U.S. Treasury holdings or sharply devaluing the yuan.
In commodity markets, oil prices have had a wild week with both the main benchmarks suffering heavy losses as traders focused on the return of Libyan oil to the market.