The question marks hanging over US President Donald Trump’s aggressive trade agenda kept world markets guessing on Tuesday, with stocks managing to end mostly firmer.
Wall Street eked out a positive finish after repeatedly bouncing in and out of negative territory on persistent trade worries.
Earlier, European and Asian stocks consolidated gains made after following New York’s lead from Monday’s higher close, when investors had cast off trade fears to recover some of the losses from last week.
Trump’s sudden threats to slap tariffs on all steel and aluminum imports sparked a global sell off, but comments indicating Canada and Mexico might eventually be exempt calmed some of the concerns.
The Dow squeaked into positive territory in the final minutes while the Nasdaq added 0.6 percent.
‘A lot of nervousness, a lot of uncertainty coming out of Washington and investors are not sure of what that means, whether it will it be limited or the ramifications have broader impact,’ Adam Sarhan of Park 50 investments told AFP.
Republican congressional leaders emphasized their opposition to the possible tariffs, which could be announced in the coming days, and US trading partners continue to threaten retaliation, including Mexico and the European Union.
Markets also were buoyed by an announcement from Seoul that the leaders of North and South Korea will hold a historic summit next month after Pyongyang expressed willingness to discuss giving up its nuclear weapons.
Auto stocks perform
European stocks closed modestly higher as investors bet that Trump would not push through with extreme protectionist policies, and stocks in big European carmakers were the main beneficiaries of the relief rally.
London ended up 0.4 percent but Paris gained only a tenth of a point.
Asia had surged earlier as shock over the controversial tariffs announcement gave way to hope that Trump may not have the support needed to move.
According to Jasper Lawler, head of research at London Capital Group, the impact of Trump’s announcement may have been dampened ‘thanks to relatively little interest by China in retaliating against the US.’
European automakers revved higher, after losing speed on worries that a trade war could hurt exports into the valuable US markets.
In Frankfurt, carmaker Volkswagen jumped by more than three percent, with Daimler and BMW also posting gains.
‘A strategic target – and standing to lose the most from any possible trade war – the German auto sector is rebounding sharply, helping lift the DAX higher,’ noted Interactive Investor analyst Rebecca O’Keeffe.
In Paris, Renault and Peugeot were also higher.
And Milan’s benchmark FTSE MIB shares index wiped out the previous day’s losses seen after Italy’s inconclusive election outcome that saw the far right make substantial gains, and even added hefty gains, outperforming its European peers.
Key figures around 2200 GMT
New York – Dow: FLAT at 24,884.12 (close)
New York – S&P 500: UP 0.3 percent at 2,728.12 (close)
New York – Nasdaq: UP 0.6 percent at 7,372.01 (close)
London – FTSE 100: UP 0.4 percent at 7,146.75 points (close)
Frankfurt – DAX 30: UP 0.2 percent at 12,113.87 (close)
Paris – CAC 40: UP 0.1 percent at 5,170.23 (close) 
Milan – FTSE MIB: UP 1.8 percent at 22,202.50 (close)
EURO STOXX 50: FLAT at 3,357.86 (close)
Tokyo – Nikkei 225: UP 1.8 percent at 21,417.76 (close)
Hong Kong – Hang Seng: UP 2.1 percent at 30,510.73 (close)
Shanghai – Composite: UP 1.0 percent at 3,289.64 (close)
Euro/dollar: UP at $1.2408 from $1.2336
Pound/dollar: UP at $1.3891 from $1.3849
Dollar/yen: DOWN at 106.17 yen from 106.20 yen
Oil – Brent North Sea: UP 25 cents at $65.79 per barrel
Oil – West Texas Intermediate: UP 3 cents at $62.60