The Christmas rally on Wall Street has fizzled out despite the US and China edging closer to the formal signing of an initial trade deal as soon as next week.

Key points: Protection of intellectual property, forced technology transfers and currency manipulation are at the heart of the deal

Protection of intellectual property, forced technology transfers and currency manipulation are at the heart of the deal But the agreement is still being checked over "so both versions match"

But the agreement is still being checked over "so both versions match" The confirmation of the trade pact's signing will come from Mr Trump, a White House aide said

The South China Morning Post reported that Chinese Vice-Premier Liu He will arrive in Washington this week to sign the trade agreement.

White House trade adviser Peter Navarro said a trade pact was likely to be signed next week.

But he said confirmation would come from US President Donald Trump.

Mr Navarro said the 86-page agreement was still being translated and included clauses on protection of intellectual property, forced technology transfers and currency manipulation.

"Basically you need to get it translated into the Chinese and double checked so both versions match," he told Fox News.

These are key issues for the US, which led Mr Trump to impose tariffs on hundreds of billions of dollars worth of Chinese imports and which saw Beijing retaliate.

Mr Trump imposed tariffs on Chinese imports, prompting retaliation from Beijing. ( Reuters: Kevin Lamarque )

In economic news, the US trade deficit narrowed to the lowest since 2016 in November.

The gap between imports and exports dropped by $US3.6 billion to $US63.2 billion.

Imports fell but exports rose.

US stocks fell from record highs on the second last trading day of the year.

The Dow Jones index lost 0.6 per cent, or 183 points, to 28,462.

The S&P 500 dropped 0.6 per cent as well, to 3,221.

And the Nasdaq fell below 9,000 and lost 0.7 per cent

In London, the FTSE 100 index fell 0.76 per cent to 7,587 as investors took profits.

Spot gold is higher at nearly $US1,515 an ounce as global economic concerns continued.

Brent crude rose to $US68.40 a barrel, boosted by optimism over a US-China trade deal.

The ASX SPI 200 index is down nearly 1 per cent to 6,677, which indicates a fall on the share market today.

And the Australian dollar has gained 0.3 per cent to nearly $0.70 on a lower greenback.