Sawt Falasteen - Equity markets swing as China-US trade euphoria fades

But while the days of breathtaking volatility seen through April appear to be over for now, analysts warned that more work was needed for Washington to reach tariff deals with countries and instill a sense of stability.

Data showing US inflation unexpectedly slowed last month provided some cheer, though observers pointed out that the real impact of Donald Trump's "Liberation Day" tolls will not likely be felt until May's readings.

The US president on Tuesday played up a deal with Beijing.

"We have the confines of a very, very strong deal with China. But the most exciting part of the deal... that's the opening up of China to US business," he told Fox News.

His remarks were made aboard Air Force One as he headed off on his Gulf tour, with Saudi Arabia on Tuesday pledging $600 billion worth of US investments in a range of sectors from defence to artificial intelligence.

The agreements -- including a huge chip deal for Nvidia and Advanced Micro Devices -- would boost US jobs, and the stock market is "gonna go a lot higher", Trump said, citing an "explosion of investment and jobs".

The tech-rich Nasdaq rallied with the S&P 500, which broke back into positive territory for the year, helped slightly by the inflation data.

Asia was mixed, though there were some standout performances.

Hong Kong and Shanghai rallied thanks to healthy buying of Chinese tech firms ahead of earnings releases from market heavyweights Alibaba and Tencent.

Investors are hoping the reports will provide an idea about how the sector's two biggest firms are coping with the trade upheaval and uncertainty in the world's number two economy. Both firms were up more than two percent.

There were also gains in Sydney, Seoul, Taipei, Mumbai and Jakarta but Singapore, Wellington, Manila and Bangkok fell.

Tokyo ended down even as electronics titan Sony surged 2.7 percent as it announced a $1.6 billion share buyback.

London and Paris were barely moved at the open, while Frankfurt edged up.

Oil edged down after enjoying a four-day rally on demand optimism and Trump's warnings to Iran over a nuclear deal.

Analysts said that while the China deal was welcome, investors were now bracing for the next developments in the US president's trade standoff with the world as countries look to strike deals with the White House to avert stiff tariffs.

"Remember it's an armistice not a peace treaty -- and the tariffs are still at these levels worse than we had before," Neil Wilson at Saxo Markets said.

"Let's be honest, the market knows this script by heart: Trump escalates. Markets tumble. Back-channels open. China blinks. A deal gets made. Risk rallies," added Stephen Innes at SPI Asset Management.

"The fog has lifted -- for now. Whether this cycle brings more sustainable upside or just sets up the next tantrum remains to be seen," he said.

Still, the dialling down of tensions with China saw JPMorgan Chase predict the US economy would grow this year, reversing its earlier forecast for a contraction caused by the tariffs.

- Key figures at around 0715 GMT -

Tokyo - Nikkei 225: DOWN 0.1 percent at 38,128.13 (close)

Hong Kong - Hang Seng Index: UP 2.0 percent at 23,560.45

Shanghai - Composite: UP 0.9 percent at 3,403.95 (close)

London - FTSE 100: FLAT at 8,603.27

Euro/dollar: UP at $1.1196 from $1.1189 on Tuesday

Pound/dollar: DOWN at $1.3303 from $1.3304

Dollar/yen: DOWN at 147.07 yen from 147.47 yen

Euro/pound: UP at 84.14 pence from 84.07 pence

West Texas Intermediate: DOWN 0.5 percent at $63.34 per barrel

Brent North Sea Crude: DOWN 0.5 percent at $66.30 per barrel

New York - Dow: DOWN 0.6 percent at 42,140.43 (close)

V.Said--SF-PST