Equity investors gave a guarded welcome on Tuesday to a resumption of US-China trade talks, but fretted over weaker global economic data, traders said.

In Europe, the French blue-chip CAC 40 index and Frankfurt’s DAX 30 were slightly higher at the close, as London’s FTSE index outperformed the pack thanks to a weaker pound boosting exporters.

Across the Atlantic, Wall Street opened almost unchanged, but subsequently fell into mildly negative territory.

“Sentiment appears a bit cautious following the release of disappointing global data and after the US threatened new tariffs on the EU,” said Forex.com analyst Fawad Razaqzada.

“But with G20 and Opec meetings behind us, the focus is turning back to economic data for market participants.” Financial markets had taken cheer on Monday after US President Donald Trump and his Chinese counterpart Xi Jinping agreed to kick-start trade negotiations, but key questions remained unresolved, including on tech trade and intellectual property.

Trump’s notorious unpredictability also made investors more reluctant to place their bets, analysts said.

“The US and China are going to enter a new phase of negotiations,” said Tangi Le Liboux, a strategist at the Aurel BGC brokerage in Paris.

“We will have to see over coming weeks whether there is real progress in these talks. Don’t forget that Donald Trump can put a question mark over everything with just a single tweet.” Among the weaker macroeconomic data, US manufacturing hit a 32-month low amid weakening demand, Germany’s key machine-tool sector sharply downgraded its forecast for this year in the face of Brexit and the US-China trade conflict, and British construction activity contracted at its fastest rate in a decade.

Observers suggested such weak data could put further pressure on central banks to provide support to economies with fresh stimulus.

Australia’s central bank on Tuesday lowered the cost of borrowing for the second-straight month, bringing interest rates to a new historic low.

In the US, the Federal Reserve is widely tipped to cut interest rates at its next policy meeting this month. The release of a US jobs report Friday will be closely followed as a weak reading could boost the case for a big reduction.

In the eurozone, however, policymakers at the European Central Bank do not see the need to rush into a rate cut, Bloomberg reported.

“Stocks may see the next catalysts stem from deteriorating economic data that will support the arguments for the Fed to deliver a stronger commitment to easing and for the other major central banks to step up their efforts,” said OANDA market analyst Edward Moya.

Oil retreated by more than three per cent from Monday when OPEC agreed to extend by nine months output cuts aimed at supporting prices and soaking up excess supplies, following last weekend’s G20 pact between cartel kingpin Saudi Arabia and non-member Russia.

“With trade tensions likely to extend well into 2020, the calculus would appear to be that lower production levels would do little to exert further upward pressure on prices,” said Michael Hewson at CMC Markets.

US-China trade negotiations are now headed in a positive direction following this weekend’s meeting between President Donald Trump and his Chinese counterpart Xi Jinping, a top White House aide said on Tuesday.

But trade advisor Peter Navarro said Chinese telecoms giant Huawei remains blocked from participating in the development of 5G wireless networks in the United States even though Washington has softened its stance toward the company.

“We’re reengaged. We’re talking on the phone already. There will probably be visits. It’s all good,” Navarro told CNBC. “From an investor’s point of view, here is all you have to know: Talks are back on track with the work that has been done to date.” The US trade delegation has been led by Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

After talks nearly collapsed in May, Trump and Xi on Saturday agreed at a meeting in Japan to resume negotiations toward ending their year-long trade war.

Trump accused the Chinese side of reneging on commitments made during the talks and jacked up duty rates on a $200 billion tranche of Chinese imports.

Markets were encouraged by Saturday’s developments, which averted further deterioration in a trade conflict already weighing on the global economy.

Stocks were struggling on Tuesday, in part because Washington threatened heavier tariffs on European goods in a dispute over subsidies to aircraft maker Airbus.

And the tariffs put in place since last year by both Washington and Beijing − which currently cover more than $360 billion in two-way trade − remain in place.

Navarro said a 150-page document developed during the US-China trade talks since December remained the basis of discussion.

He also said all that was at issue in Saturday’s agreement on Huawei was “a small amount of chips” with negligible implications for spy craft.

Agencies