LONDON/SHANGHAI: Stocks rallied on Monday (May 12) after Chinese and US officials held “substantial” trade talks and slashed their tit-for-tat tariffs for 90 days, fuelling hopes the two sides will pull back from a standoff that has rattled global markets.

Investors have been on a rollercoaster ride since Donald Trump unveiled eye-watering tolls on trading partners on Apr 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.

The US president eventually hiked the measures against China to 145 per cent, which were met with retaliatory rates of 125 per cent.

However, there have been signs of an easing of tensions and after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending a crisis that fuelled fears of a global recession.

On Monday the two said they would slash their levies to cool tensions and give officials time to resolve their differences.

In a joint statement the US side said it would reduce tolls to 30 per cent while Chinese tariffs would be cut to 10 per cent.

Asian markets jumped, with Hong Kong up more than 3 per cent while Shanghai also enjoyed healthy buying interest.

Tokyo, Sydney, Seoul, Taipei and Wellington were all in the green.

London, Paris and Frankfurt all rose more than 1 per cent. US futures surged more than 1 per cent.

Mumbai jumped more than 3 per cent after India and Pakistan agreed a ceasefire at the weekend following four days of missile, drone and artillery attacks between the two countries which killed at least 60 people and sent thousands fleeing.

Pakistan’s stock exchange rocketed more than 9 per cent.

Oil prices jumped more than 3 per cent owing to speculation easing China-US tensions would help demand. The dollar also advanced 1 per cent against the euro and yen. Gold, which rallied last month over a rush to safe havens, extended losses