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By Shen Hong in Shanghai and Steven Russolillo in Hong Kong 

Global stocks and oil rose Monday, boosted by a temporary cease-fire on trade between Beijing and Washington.

Traders and analysts called the moves a relief rally, and cautioned that frictions around commerce between the world's two largest economies were likely to be long-lasting. Many investors are also concerned about the potential for a further slowdown in China and about financial risk in that country.

The Stoxx Europe 600 index was 1.1% higher, led by technology shares, while Germany's DAX index was up 1.6%. Shares in London were also higher, with the FTSE 100 rising 0.9%.

The benchmark Shanghai Composite Index gained 2.2% while Japan's Nikkei 225 Index rose 2.1%. The yuan edged up 0.3% against the dollar in both onshore and offshore trading. Brent crude oil futures increased 2.7%.

In the U.S., S&P 500 futures rose 1.1%. Changes in equity futures don't always accurately predict stock moves after the opening bell.

Haven assets, which tend to rally in times of stress, retreated. Gold fell nearly 1.9%, the Japanese yen weakened slightly against the dollar, and 10-year U.S. Treasurys fell in price. That pushed up yields, which move inversely to prices, by 4.5 basis points to 2.045%.

Investors' increased appetite for risky assets came after President Trump and Chinese President Xi Jinping agreed Saturday to resume trade talks.

The U.S. said it would indefinitely shelve plans to levy duties on the roughly $300 billion of Chinese imports that aren't currently covered by 25% tariffs. In addition, Mr. Trump said he would let U.S. firms sell high-tech equipment to Huawei Technologies Co. and China would start buying large amounts of American farm products.

Michael Kelly, global head of multiasset at PineBridge Investments, said the meeting's outcome was "a modest favorable surprise for markets." The absence of a time limit on new trade negotiations and "the usage of Huawei as a bargaining chip" went further than most investors were expecting, he said. However, issues about intellectual property were very unlikely to be solved in the coming talks, he added.

Likewise, Raymond Yeung, chief economist for Greater China at ANZ, said the U.S. and China haven't made progress on key issues such as intellectual-property rights and technology transfer.

In a note to clients, Mr. Yeung said the latest truce had a "déjà vu feel," since the U.S. had held off on new tariffs in exchange for China's purchases of agricultural products, just as it had done in December. The outcome "does not convince us that the trade tensions have been resolved," he said.

In Shanghai, stock gains were across the board, led by insurers, brokerages and banks. Ping An Insurance Group Co., one of China's largest insurers, rose 3.7% while Citic Securities Co., the country's biggest broker by assets, added 2.4%.

Zhang Gang, a Shanghai-based senior analyst at Central China Securities, said big financial stocks rose because they should benefit from a stronger yuan, but he had reservations about the rally's sustainability.

"Mr. Trump changes his mind faster than one flips the pages of a book," he said.

Technology hardware companies were among the biggest gainers. In mainland China, video-surveillance specialist Hangzhou Hikvision Digital Technology Co., surged 8.2%, while ZTE Corp. gained 4.2%. ZTE is a maker of telecommunications equipment, and a major competitor to the unlisted Huawei. The broader Shenzhen Composite Index rallied 3.5%. Elsewhere in Asian tech, Taiwan Semiconductor Manufacturing Co. gained 4%, while Japanese robot-maker Fanuc added 3.1%.

Meanwhile, data released on the weekend showed factory activity in China contracted for the second straight month in June.

"The economy is under downward pressure and it needs more stimulus measures from the government," said Mr. Zhang from Central China Securities.

Joe Wallace in London contributed to this article.

Write to Shen Hong at hong.shen@wsj.com and Steven Russolillo at steven.russolillo@wsj.com

(END) Dow Jones Newswires

July 01, 2019 04:27 ET (08:27 GMT)

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