WASHINGTON/BEIJING (Reuters) - China and the United States on Thursday agreed to hold high-level talks in early October in Washington, cheering investors hoping for a trade war thaw as new U.S. tariffs on Chinese consumer goods chip away at global growth.

The new talks were arranged during a phone call between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin, China’s commerce ministry said in a statement.

They would be the first in-person, high-level discussions since a failed U.S.-China trade meeting at the end of July prompted U.S. President Donald Trump to proceed with fresh tariffs on virtually all remaining Chinese imports so far untouched by the trade war.

But there was no indication that the first round of these tariffs -- a 15% duty on Chinese consumer goods imposed on Sept. 1 -- would be rescinded or halt a planned Oct. 1 tariff increase on $250 billion worth of goods already levied at 25%.

The U.S. Trade Representative’s office did not specify timing for the ministerial-level talks, saying only that these would take place “in the coming weeks.”

“In advance of these discussions, deputy-level meetings will take place in mid-September to lay the groundwork for meaningful progress,” USTR spokesman Jeff Emerson said in a statement.

Hu Xijin, editor of China’s state-run Global Times newspaper, struck an upbeat tone on Twitter, saying, “Personally I think the US, worn out by the trade war, may no longer hope for crushing China’s will. There’s more possibility of a breakthrough between the two sides.”

But William Reinsch, a former senior U.S. Commerce Department official, said the trade talks could drag well into 2020 since the two sides are still far apart on key issues, such as Washington’s demand that Beijing codify its reforms into law.

“The president has to choose between accepting a weak agreement or continuing the war,” said Reinsch, now at the Center for Strategic and International Studies.

“The trick is to make an agreement in September or October 2020, shortly before the presidential election, and it’ll look like he’s a hero,” Reinsch said. “If he does that too soon, it has time to fall apart before the election. The Chinese aren’t going to comply with it anyway,” Reinsch added.

Since a breakdown in the talks in May, Washington and Beijing have failed to narrow their deep differences over U.S. demands for sweeping changes to China’s practices on intellectual property protections, transfers of U.S. technology to Chinese companies, curbs to industrial subsidies and increased access to China’s markets.

MARKETS RALLY

Nonetheless, U.S. stocks staged a strong rally on the potential cooling of trade tensions, with the tech-heavy Nasdaq Composite .IXIC rising 1.75% and the broad S&P 500 .SPX closing 1.3% higher.

Asian and European shares also hit one-month highs.

Aiding the rally was positive U.S. economic data, including an estimate of private sector payrolls growth and an acceleration of U.S. services sector activity.

On Sunday, Washington began imposing 15% tariffs on an array of Chinese imports, mostly consumer products, while China began placing duties on U.S. crude oil. On Monday, China said it had lodged a complaint against the United States at the World Trade Organization.

Washington plans to increase the tariff rate to 30% from 25% on $250 billion worth of Chinese imports from Oct. 1.

FILE PHOTO: Chinese and U.S. flags flutter near The Bund, before U.S. trade delegation meet their Chinese counterparts for talks in Shanghai, China July 30, 2019. REUTERS/Aly Song/File Photo/File Photo

The National Retail Federation said it was encouraged by confirmation of in-person trade talks, and urged Washington to end the trade war and work for a rollback of all tariffs.

“This trade war has gone on far too long, and the harmful consequences for American business and consumers continues to grow,” said the group, which bills itself as the world’s largest retail trade association.

“REALLY GOOD” CALL

China’s commerce ministry said its trade team will consult with its U.S. counterpart in mid-September in preparation for negotiations in early October.

“Lead negotiators from both sides had a really good phone call this morning,” China’s commerce ministry spokesman Gao Feng said in a weekly briefing. “We’ll strive to achieve substantial progress during the 13th Sino-U.S. high-level negotiations in early October.”

Gao also said Beijing opposes any escalation in the trade war.

Analysts noted that investors remain nervous and markets could react with volatility on comments or actions from either side.

Trump was uncharacteristically quiet on China trade on Thursday, not tweeting about it and not taking questions from reporters at a White House event. His official Facebook page posted a link to a story on the talks along with the comment: “We are doing very well with China!”

On Tuesday, Trump had warned he would be tougher on Beijing in a second term if trade talks dragged on, compounding market fears that disputes between the United States and China could trigger a U.S. recession.

The U.S. president had lashed out frequently at Beijing over the past two months, frustrated by its failure to follow through on purchases of U.S. farm products that he said were agreed in his meeting with Chinese President Xi Jinping in June.

China, for its part, has been stung by Washington’s failure to make good on its promise to ease restrictions on Chinese tech giant Huawei Technologies Co Ltd [HWT.UL].