NEW YORK (Reuters) - World stocks climbed for a fifth session on Wednesday on optimism over U.S.-China trade talks and for a softer British exit from the European Union, while oil prices retreated after an unexpected rise in inventories.

The German share price index DAX graph is pictured at the stock exchange in Frankfurt, Germany, March 28, 2019. REUTERS/Staff

U.S. stocks climbed in early trading after White House economic adviser Larry Kudlow had said on Tuesday that China and the United States expect to make more headway in trade talks this week. In addition, the Financial Times reported the two sides were drawing closer to a deal.

“What the market has certainly relied upon is that China is one of the last legs here to get solidified,” said Paul Springmeyer, managing director at U.S. Bank Wealth Management Private Client Reserve in Minneapolis.

Still, U.S. economic data kept gains on Wall Street in check, as a gauge of the labor market showed private employers added fewer jobs than anticipated in March while a separate report showed services sector activity slowed to a more than 1-1/2-year low, highlighting a loss of momentum in the economy.

“The underlying fundamentals certainly are still supportive of equities but needless to say the kind of slowdown in metrics and in growth across the globe as well seems to be taking hold somewhat,” said Springmeyer.

The Dow Jones Industrial Average rose 38.9 points, or 0.15%, to 26,218.03, the S&P 500 gained 6.14 points, or 0.21%, to 2,873.38 and the Nasdaq Composite added 46.86 points, or 0.6%, to 7,895.55.

MSCI’s gauge of stocks across the globe gained 0.55%.

Aside from trade optimism, European shares were lifted by data out of China that showed activity in its services sector hit a 14-month high and the latest plan by British Prime Minister Theresa May to reach a deal on Brexit. In addition, euro zone retail sales were better than expected in February.

With a fourth straight day of gains, European stocks closed at an eight-month high. The pan-European STOXX 600 index rose 1.01%.

Britain’s opposition Labour Party said it had held constructive discussions with Prime Minister Theresa May on breaking the Brexit deadlock.

Sterling climbed on the hopes for a Brexit solution while the U.S.-China trade talks optimism bolstered risk appetite and sent the euro higher against the dollar.

The dollar index, tracking the unit against six major currencies, fell 0.26%, with the euro up 0.3% to $1.1236. Sterling was last trading at $1.3159, up 0.24% on the day.

Signs of progress in U.S.-China trade talks and decent Chinese and U.S. factory activity data in recent days have boosted sentiment and helped world recession fears recede. On Friday, investors will look at the monthly U.S. payrolls report for a fresh economic catalyst.

Generally strong world stocks and hopes of a softer Brexit sparked a sell-off in safe-haven government bonds, with U.S. yields hitting a 1-1/2-week high.

Benchmark 10-year notes last fell 12/32 in price to yield 2.5205%, from 2.479% late on Tuesday.

Oil prices initially rose, with Brent reaching as high as $69.96 a barrel, then turned lower after EIA data showed a surprise large build in U.S. crude inventories.

U.S. crude settled down 0.19% at $62.46 per barrel and Brent settled at $69.31, down 0.09%.

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