NEW YORK (Reuters) - A gauge of world equity markets rebounded and the dollar pared losses on Friday after President Donald Trump said U.S.-China trade talks were constructive, easing tensions that pushed stocks on Wall Street toward their biggest weekly loss since December.

The major U.S. stock indexes swooned more than 1% before rebounding from session lows, first on encouraging comments from Treasury Secretary Steven Mnuchin and then Trump’s remarks that his relationship with President Xi remained strong.

Trump earlier said he was in no hurry to sign a trade deal with China as Washington imposed a new set of tariffs on Chinese goods and negotiators ended two days of talks aimed at salvaging an agreement aimed at ending a 10-month trade war.

Trump’s remarks were made in a tweet and drove traders’ optimism that could be seen in the Australian dollar, a proxy for Chinese economic prospects, which was 0.19% higher.

U.S. Treasury yields were little changed. Longer-dated yields hovered just off five-week lows, as trade tension worries simmered down even in the absence of a deal.

The United States early in the day increased tariffs on $200 billion in Chinese goods to 25% from 10%, rattling markets on concerns about global growth as China is expected to retaliate.

In the short term, China needs a trade deal more than the U.S. But in the long term, the U.S. needs it more than China, said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York, who called it a “pretty good balance.”

“The market is getting that the statements (from Mnuchin and Trump) are more political than indicative of a change in strategy. Nothing has changed in terms of our investment thesis,” Pursche said.

MSCI’s gauge of stock performance in 47 countries across the globe gained 0.32%.

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European shares rose on surging stock of industrial group Thyssenkrupp AG and robust defensive stocks. The pan-European STOXX 600 index rose 0.32%.

Thyssenkrupp gained 28.2% by short-covering on news it will list its successful elevators business and embark on a fresh restructuring.

London’s main stock index, the FTSE 100, closed lower to cap its worst week since early December. Drugmaker AstraZeneca weighed, falling 2.3%, after ambiguous results in test of an anemia treatment.

Despite the late-day rally the S&P 500 and Nasdaq posted their biggest weekly decline of the year, shedding 2.17% and 3.03% respectively.

The Dow Jones Industrial Average rose 114.01 points, or 0.44%, to 25,942.37. The S&P 500 gained 10.68 points, or 0.37%, to 2,881.4 and the Nasdaq Composite added 6.35 points, or 0.08%, to 7,916.94.

The U.S. dollar ticked up against the safe-haven Japanese yen as hopes rose for a U.S.-China compromise on trade.

The dollar index fell 0.07%, with the euro up 0.12% to $1.1234. The Japanese yen weakened 0.13% versus the greenback at 109.95 per dollar.

U.S. Treasury yields were little changed.

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Benchmark 10-year notes fell 4/32 in price to push its yield up to 2.4707%.

Oil prices closed the session mostly steady, ending the week slightly lower as the U.S.-Sino trade tensions overshadowed tightening global supplies and expectations of rising U.S. refining demand.

Brent crude oil settled up 23 cents at $70.62 a barrel, but posted a weekly loss of 0.3%.

U.S. West Texas Intermediate (WTI) crude futures settled down 4 cents at $61.66, with a weekly loss of 0.5%.

Gold prices settled higher before Trump made his remarks and eased fears of a global economic slowdown that has lifted bullion prices for the week.

U.S. gold futures settled up 0.2% at $1,287.40.