US stocks show signs of stabilising, but gains were kept in check as the United States and China give conflicting signals on how their trade talks are progressing.

Key points: The major US share indices gained around 0.2pc, the first rise this week

The major US share indices gained around 0.2pc, the first rise this week China and the US sent conflicting messages on the trade war, with President Trump saying "we're doing very well with China"

China and the US sent conflicting messages on the trade war, with President Trump saying "we're doing very well with China" The benchmark S&P 500 index rose around 17pc over the first four months of the year, but is down 5pc in May

"China would love to make a deal with us," US President Donald Trump told reporters at the White House.

"We had a deal and they broke the deal. I think if they had it to do again they wouldn't have done what they did.

"I think we're doing very well with China."

However, a senior Chinese diplomat gave a conflicting message at a media conference in Beijing.

"We oppose a trade war but are not afraid of a trade war," Chinese Vice-Foreign Minister Zhang Hanhui said.

"This kind of deliberately provoking trade disputes is naked economic terrorism, economic chauvinism, economic bullying."

Trade tensions between the world's two biggest economies escalated sharply earlier this month after the Trump administration accused China of having "reneged" on its previous promises to make structural changes to its economic practices.

Washington later imposed additional tariffs of up to 25 per cent on $US200 billion of Chinese goods, prompting Beijing to retaliate with its own tariffs.

Market snapshot at 7:50am (AEST): ASX SPI futures +0.3pc at 6,412, ASX 200 (Thursday's close) -0.7pc at 6,392

ASX SPI futures +0.3pc at 6,412, ASX 200 (Thursday's close) -0.7pc at 6,392 AUD: 69.08 US cents, 54.78 British pence, 62.06 euro cents, 75.74 Japanese yen, $NZ1.06

AUD: 69.08 US cents, 54.78 British pence, 62.06 euro cents, 75.74 Japanese yen, $NZ1.06 US: Dow Jones +0.2pc at 25,170, S&P 500 +0.2pc at 2,789, Nasdaq +0.3pc at 7,568

US: Dow Jones +0.2pc at 25,170, S&P 500 +0.2pc at 2,789, Nasdaq +0.3pc at 7,568 Europe: FTSE 100 +0.5pc at 7,118, DAX +0.5pc at 11,902, CAC +0.5pc at 5,249, Euro Stoxx 50 +0.6pc at 3,318

Europe: FTSE 100 +0.5pc at 7,118, DAX +0.5pc at 11,902, CAC +0.5pc at 5,249, Euro Stoxx 50 +0.6pc at 3,318 Commodities: Brent crude -4.2pc at $US66.53/barrel, spot gold +0.7pc at $US1,288.50/ounce, iron ore -2.2pc at $US103.87

Early signs of recovery

US stocks drifted in and out of negative territory towards the final hour of trade amid the mixed signals from the US and China.

In New York, the Dow Jones index closed 43 points, or 0.2 per cent, higher at 25,170.

The broader S&P 500 rose 0.2 per cent, while the tech-heavy Nasdaq index lifted 0.3 per cent.

The S&P energy sector fell 1.2 per cent, as oil prices tumbled sharply, down 4 per cent, in part due to a smaller-than-expected decline in US crude inventories. The sector has fallen more than 10 per cent this month.

Trade jitters helped sustain demand for safe haven debt, as US Treasury yields fell to a 20-month low, around 2.227 per cent.

The yield curve between three-month (short-term) bills and 10-year (long-term) notes remained inverted, raising concerns about slowing economic growth and dragging down the interest-rate sensitive bank stocks.

Wall Street has fallen about 5 per cent in the past month as the ongoing uncertainty around the US-China trade dispute has rattled investors, sparking fears about its impact on global economic growth.

It was a sharp reversal from the optimism earlier in the year — the S&P 500 had jumped more than 17 per cent in the first four months of 2019, when it seemed both nations were on the verge of striking a trade deal.

"After multiple days of down, down, down the market usually takes a collective breath for some stability and a re-evaluation of risk," said Ben Phillips, chief investment officer at Eventshares.

"The market is coming to the realisation that we are not getting really clean or clear information and it is going to be a lot of noise and just prepare for that."

ABC/Reuters