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Global stocks were mixed on Wednesday as investors girded themselves for what German Chancellor Angela Merkel called a ‘contentious’ summit of Group of Seven nations later this week.
European stocks were little changed but Wall Street posted handsome gains, lifted by a rally in bank shares and some industrial companies. 
The Dow gained 1.4 percent and the Nasdaq ended at its third straight record.
But policy makers were readying themselves for some awkward exchanges at this weekend’s G7 summit in Quebec, which comes after US President Donald Trump slapped Canada, Mexico and the European Union with steel and aluminum tariffs.
In response to Trump’s punitive tariffs on metals, Canada, the EU and Mexico have all announced retaliatory measures.
‘We know certainly that there will be frank and sometimes difficult discussions around the G7 table, particularly with the US president on tariffs,’ Canadian Prime Minister Justin Trudeau.
Trudeau had hoped to put the focus on jobs, security concerns, cleaning up the world’s oceans and empowering women. But officials have conceded the G7 agenda is likely to be overtaken by trade disputes.
‘Buckle up’
‘Investors should buckle up for a potential showdown as trade is expected to be a major talking point throughout the summit,’ said FXTM analyst Lukman Otunuga. ‘With escalating trade tensions seen as a significant threat to global economic growth, this could be a G7 meeting like no other.’
Meanwhile, official data showed that the US trade deficit narrowed in April for a second straight month. 
The total trade deficit fell 2.1 percent for April to $46.2 billion after a downward revision for March. The result was better than analysts expected since the consensus forecast called for an increase.
The ECB’s chief economist Peter Praet said policymakers would discuss when to wind down the massive bond-buying scheme that has propped up the eurozone economy for the past three years.
Praet’s comments helped lift the euro and also reverberated through US markets.
Analysts said the comments confirmed a process of monetary tightening and this lifted US Treasury yields and boosting expectations that banks would make more money from higher interest rates.
JPMorgan Chase, Citigroup and Bank of America all won at least two percent.
Another outperformer was Tesla Motors, which soared 9.7 percent as chief executive Elon Musk expressed confidence that the company would reach production targets for its Model 3 sedan.
Key figures around 2100 GMT
New York – Dow Jones: UP 1.4 percent at 25,146.39 (close)
New York – S&P 500: UP 0.9 percent at 2,772.35 (close)
New York – Nasdaq: UP 0.7 percent at 7,689.24 (close)
London – FTSE 100: UP 0.3 percent at 7,712.37 (close)
Paris – CAC 40: DOWN 0.1 percent at 5,457.56 (close)
Frankfurt – DAX 30: UP 0.3 percent at 12,830.07 (close)
EURO STOXX 50: UP 0.1 percent at 3,460.12 (close)
Tokyo – Nikkei 225: UP 0.4 percent at 22,625.73 (close)
Hong Kong – Hang Seng: UP 0.5 percent at 31,259.10 (close)
Shanghai – Composite: FLAT at 3,115.18 (close)
Euro/dollar: UP at $1.1774 from $1.1718 at 2100 GMT on Tuesday
Pound/dollar: UP at $1.3413 from $1.3393
Dollar/yen: UP at 110.19 yen from 109.79 yen
Oil – Brent Crude: DOWN 2 cents at $75.36 per barrel
Oil – West Texas Intermediate: DOWN 79 cents at $64.73 per barrel