The US and China have agreed to hold high-level talks next month to try to resolve their escalating trade dispute - boosting stock markets globally.

Investors were buoyed by the announcement that officials from the world's two biggest economies would meet in early October.

Washington and Beijing have been locked in a tit-for-tat spiral of increasing tariffs on each other's goods, threatening to drag on an already slowing global economy.

But on Thursday, China's commerce ministry said fresh talks had been agreed in a phone call between Chinese vice premier Liu He, US trade representative Robert Lighthizer and US treasury secretary Steven Mnuchin.

"Both sides agreed that they should work together and take practical actions to create good conditions for consultations," the ministry said.


It comes after the US began imposing tariffs of 15% on a range of Chinese imports on Sunday, while China began placing duties on US crude oil.

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Washington plans to increase the tariff rate to 30% from the 25% duty already in place on $250bn (£203bn) of Chinese goods from 1 October.

Donald Trump warned earlier this week that he would be tougher on Beijing in a second term as president if the dispute dragged on without agreement.

The announcement of talks gave a dose of relief to the stock markets, which have been spooked by the deepening tensions over recent months.

In Asia, China's Shanghai Composite and South Korea's Kospi both climbed about 1% and the Nikkei was 2% higher.

French, German, Italian and Spanish share indices also rose on Thursday, though the FTSE 100 bucked the trend.

The London index closed 0.6% lower, partly down to several stocks trading ex-dividend - a cut-off date after which buyers of shares are no longer entitled to its next dividend payment.

The FTSE 100 also tends to be weaker when the pound strengthens, as it has done over the last day with the threat of a no-deal Brexit ebbing.

US markets responded positively with the Dow Jones Industrial Average and the tech-focused Nasdaq up by more than 1.5% in late deals.

Oil prices - a barometer of economic confidence - were also up sharply with a barrel of Brent crude gaining $2 at one stage before settling flat on the day at $60.