Global stocks rally on lower oil prices, US-China hopes

Stock markets climbed on Monday, boosted by falling oil prices and positive signals from trade talks between Chinese and US officials over the weekend.

Stocks had come under pressure last week after the US Federal Reserve raised interest rates to curb inflation pressures, in part from soaring energy costs from the US war against Iran.

But with oil falling further Monday, "The pressure cooker of worry about inflation is giving off less steam as crude prices have fallen back amid growing hopes that fresh negotiations could lead to a breakthrough in the Iran conflict," said Susannah Streeter, chief investment strategist at Wealth Club.

Oil prices dropped more than three percent on Monday after US President Donald Trump signalled that he would be open to meeting with Iranian President Masoud Pezeshkian, who will travel to New York for the UN General Assembly this week.

That helped the London, Paris and Frankfurt stock markets pile on around one percent in midday deals.

Investors brushed off fresh political difficulties for German Chancellor Friedrich Merz, whose centre-right CDU party suffered two regional election defeats at the hands of far-right and far-left parties.

US and Chinese economic officials met on Sunday for closely watched talks on trade and artificial intelligence, ahead of a summit on Thursday between Trump and Chinese President Xi Jinping in Washington.

US Treasury Secretary Scott Bessent said that following lengthy conversations, the two countries had discussed setting up a channel called "US-China AI dialogue" to communicate about the technology and its potential risks.

Hong Kong's main index rose 1.2 percent Monday while shares in Shanghai rose one percent, and South Korea's tech-heavy benchmark finished the day up 1.7 percent. Tokyo was closed for a public holiday.

At the talks between Trump and Xi, "the area with the most potential to move markets is probably any Chinese cooperation on Iran, given recent oil and bond market volatility," said Thomas Mathews of Capital Economics.

Streeter said "there are hopes that the trade truce, which is due to expire on November 10, will be extended, and that potentially lower tariffs could be brokered".

Brent North Sea Crude: DOWN 3.3 percent at $100.46 per barrel

West Texas Intermediate: DOWN 3.1 percent at $97.15 per barrel

London - FTSE 100: UP 0.9 percent at 10,757.72 points

Paris - CAC 40: UP 0.9 percent at 8,139.47

Frankfurt - DAX: UP 1.1 percent at 25,576.45

Hong Kong - Hang Seng Index: UP 1.2 percent at 25,042.71 (close)

Shanghai - Composite: UP 1.0 percent at 3,949.91 (close)

Tokyo - Nikkei 225: closed for a holiday

Dollar/yen: UP at 157.26 yen from 156.73 yen on Friday

Euro/dollar: DOWN at $1.1479 from $1.1487

Pound/dollar: DOWN at $1.3382 from $1.3395

Euro/pound: UP at 85.77 pence from 85.76 pence