LONDON: Renewed hopes for trade talks boosted stock markets Friday after China said it would not retaliate against the latest US tariffs, setting up a positive end to a volatile week.

"We may be facing up to the reality of recession but optimism continues to flow through the veins of investors following comments from the Chinese Commerce Ministry on Thursday," said Craig Erlam, senior market analyst at Oanda trading group.

The easing tensions helped China's yuan strengthen slightly against the dollar, having fallen to an 11-year low earlier in the week.

The euro recovered from a month-low of $1.1033 after official data showed inflation in the eurozone remains at 1.0 percent.

Sterling meanwhile stabilised further after heavy Brexit-fuelled losses earlier in the week.

Across the Atlantic, all three main US stocks indices ended with strong gains Thursday that filtered through to Asia and Europe on their last trading day of the week.

But after starting Friday more than one percent higher, Hong Kong finished with a gain of only 0.1 percent as the arrest of activists fuelled fresh worries about violent protests in the city.

Dealers brushed off data Thursday showing the US economy grew at a slower pace than initially thought in the second quarter. Those figures were soothed by the fact that consumer spending remained strong.

Elsewhere, oil prices slid after a three-day surge on positivity surrounding trade talks was coupled with a plunge in US stockpiles that pointed to improving demand.

On the corporate front, shares in Airbus were up 0.6 percent to 126 euros in early afternoon Paris trading.

The European aircraft manufacturer earlier said it had agreed to sell 42 planes to Malaysian low-cost airline AirAsia X in a deal worth $5.0 billion (4.5 billion euros) before expected discounts.

The Asian carrier has placed a firm order for 12 long-range A330neo planes and 30 medium-range A321XLR models.—AFP