Business

LONDON — European shares traded higher in the morning on Tuesday as a whiff of optimism over the Sino-US trade dispute lifted sentiment after a burst of political risk and worries about global growth hit world markets in the previous session.

The Euro zone STOXXE index was up 0.7 per cent at 09:20 GMT with Germany's DAX, the most sensitive to China due to its big exporters, up 0.9 per cent.

Earlier, Asian shares got a bounce after reports that Chinese and US trade officials spoke by phone, a sign that discussions between the world's top two economies continue even after the arrest of Huawei's CFO.

"Remember this isn't the first time these backroom negotiations have dangled a carrot in front of the markets," said Oanda trader Stephen Innes. 

"And while I view this development as positively significant in the broader context, a trade war is far from over, and these are little more than a preliminary step in what should be a long and winding road fraught with peril", he added.

France's CAC 40 was up 0.8 per cent after French president Emmanuel Macron pledged late on Monday to raise the minimum wage and cut taxes in a bid to prevent more violent protests that have rocked the eurozone's second largest economy. 

Britain's FTSE 100 was up 0.4 per cent with the pound stabilising after Monday's Brexit-related slide to 20-month lows and Prime Minister Theresa May's postponement of a key vote on how Britain will leave the European Union. 

"The fact that markets are actually moving forward shows that investors are perhaps scouting around for bargains amid this year's turmoil rather than sitting on their hands in fear", commented Russ Mould, investment director at AJ Bell.

Smaller companies in the UK-focused FTSE 250 were flat. 

Among top performers was British advertising giant WPP , which rose 4.9 per cent after announcing plans to spend 300 million pounds and cut 2,500 jobs — part of new boss Mark Read's plans to return the world's biggest advertising group to growth.

Shares in Ashtead jumped 6.4 per cent as the equipment rental firm said it expected full-year results ahead of expectations.

In Germany, Linde rose 2.7 per cent after news that shareholders would be offered an extra 1.22 euros to help complete a merger with US rival Praxair. 

France's Suez fell 3.2 per cent as a source said the board of French utility Engie decided to stick with its 32 per cent stake in the utilities group. 

In Italy, Banco BPM was the best performer in Milan, up 3.1 per cent after announcing it had agreed to sell up to 7.8 billion euros in bad loans along with a stake in its debt recovery business to Credito Fondiario and US fund Elliott. 

LONDON — Sterling tumbled to its weakest since April 2017 on Monday after Prime Minister Theresa May pulled a parliamentary vote on her Brexit deal with the European Union, panicking investors about deepening political uncertainty in Britain. 

May said on Monday she was delaying the planned vote as her deal would likely be rejected "by a significant margin". Colleagues had told May that she faced a rout in the vote, which was set for Tuesday. 

The move thrusts Britain's exit from the European Union into further confusion, with possible options including a disorderly no-deal Brexit, another referendum on EU membership, or a last minute renegotiation of May's deal with Brussels.

May said she would do all she could to secure further assurances from the EU on the so-called backstop arrangement, a crucial part of the deal bitterly opposed by many of her fellow conservatives and opposition parties.

"Uncertainty is the only thing hitting the pound at the moment," said Kallum Pickering, an economist at Berenberg.

The pound fell 1.6 per cent against the dollar to as low as $1.2507, the majority of the losses coming after May confirmed she was delaying the vote.

Against the euro, the pound dropped 1.5 per cent to as weak as 90.875 pence, its lowest since August.

"Britain's exporter-heavy FTSE 100 Index, which usually rises when sterling falls, succumbed to widespread selling pressure and fell 0.8 per cent as investors fretted about the consequences of the political chaos for UK companies."

The more domestic FTSE 250 Index tumbled nearly 2 per cent.

Perceived safe-haven British government bonds rallied, with 10-year British government bond yields falling 7.5 basis points to 1.19 per cent, the lowest since mid-August.

The pound has fallen for four consecutive weeks, with traders struggling to comprehend the vote options and consequences.

Earlier, the EU's top court had ruled on Monday that Britain could unilaterally reverse its decision to leave, easing concerns about Britain crashing out of the bloc in March without a deal.

But analysts said sterling's weakness on Monday reflected deepening uncertainty as well as concerns about May's future as prime minister.

"May is now expected to make a late dash to Brussels in a frantic bid to renegotiate the deal but her position is no doubt becoming increasingly untenable," said David Cheetham, market analyst at online broker XTB.

Before the vote was delayed, analysts had been focusing on the number of votes May could win or lose by and what that could mean for her chances of renegotiating a deal. 

Some analysts saw a silver lining. 

Pickering at Berenberg said that he believed May's delayed vote would end with the British parliament gaining a greater say on the withdrawal agreement and the sort of Brexit that the UK gets.

"This is ultimately a process towards softer Brexit so the pound is reacting more to the uncertainty because, from my point of view, this is mostly a positive development," he said.

NEW YORK — With bond and equity markets from the United States to emerging markets all on pace to lose money this year, investors have not seen this much red on their screens since 1972, the last time no asset class returned at least 5 per cent. 

Yet, fund managers are finding things to like despite the recent market volatility, which sent the Dow Jones Industrial Average down more than 2 per cent this week. 

As they start to position their portfolios for 2019, fund managers, from firms including ValueWorks, Sierra Investment Management and Federated Investors, say they are looking at sectors that could snap back next year thanks to a combination of more attractive valuations and a decline in the dollar.

Such a rally in both fixed income and equities markets would not be unprecedented. A 20 per cent decline in the value of the dollar pushed the S&P 500 up nearly 38 per cent in 1995, while the US bond market returned nearly 17 per cent the same year following one of the worst fixed-income bear markets in memory. 

“If you look out at the broader picture, a lot of things are going right,” said Terri Spath, chief investment officer at Sierra Investment Management, citing strong consumer confidence and other economic indicators. “It’s easy to make a bull case because the economy is humming along just fine, but the market is nervous because the headlines are really loud and no one likes the unknown,” she said. 

Part of the yield curve inverted this week when yields on 5-year Treasuries dropped below those on both the 2- and 3-year securities, a signal that has preceded every US recession in recent memory by between 15 months and 2 years. Yet, the long delay between a yield curve inversion and a full recession can still be a profitable time to invest, said Charles Lemonides, founder of New York-based hedge fund ValueWorks. 

“I don’t buy the thesis that the economy is slowing, but I do believe we are late in the cycle. We’re going into a period where investors are getting a little fooled by the headlines and avoiding names that have excitement,” he said. 

As a result, Lemonides has increased his long exposure to companies that have sold off, including battered semiconductor maker Micron Technology Inc., whose shares are down 37 per cent over the last six months, and iPhone maker Apple Inc., whose shares are down nearly 23 per cent over the last three months. At the same time, Lemonides has increased his short position on defensive stocks like consumer staples companies Clorox Co. and Church & Dwight Co. Inc., which have benefited from the market volatility. 

Chad Oviatt, director of investment management at Huntington National Bank, said his firm has been increasing its allocation to US large-cap stocks in anticipation that declining bond buying by the European Central Bank and a resolution of US-China trade tensions will derail the rally in the dollar this year. That should improve margins for US exporters. 

A Reuters poll of 60 currency analysts that ended on December 5 forecast that the dollar will be weaker against major currencies next year, with most of the declines coming in the second half of 2019. 

Linda Bakhshian, a portfolio manager of several value-oriented funds at Federated, said the recent stock market volatility has made stocks, including Apple, JPMorgan Chase & Co., Walmart Inc. and Microsoft Corp. more attractive at a time when the US economy continues to look stronger than either Europe’s or China’s. Low oil prices, continued job growth and strong consumer spending will likely prolong the US economic expansion well past next year, she said. 

“If the markets were to close for the year today, people would go into 2019 thinking that there are more opportunities given the valuations,” she said. 

VIENNA  — OPEC members and 10 other oil producing nations, including Russia, agreed on Friday to cut output by 1.2 million barrels per day [bpd] in a bid to reverse falls in prices in recent months.

Energy ministers reached the deal — which takes effect from January 1 but has already sent prices surging on oil markets — after two days of talks at OPEC headquarters in Vienna.

"OPEC group countries are contributing 800,000 barrels per day as a cut, and the non-OPEC [countries] will be contributing 400,000 barrels per day," Emirati Oil Minister Suhail Mohamed Al Mazrouei said at a news conference.

OPEC and its partners, which together account for around half of global output, met against the backdrop of a glut in the market which had led to oil prices falling by more than 30 per cent in two months.

Mazrouei said that three countries had been allowed exemptions from the agreement due to "special circumstances".

"Those countries are Iran and Venezuela because of the sanctions and Libya because of the fact that unfortunately they are on and off," he added, alluding to the impact on Libyan production of continuing conflict there.

Mazrouei said that the exemptions mean that the cuts introduced by other member states are "going to be a bit higher than just the average for everyone".

For his part Russian Energy Minister Alexander Novak — whose country is the world's second biggest producer of oil — said that the agreement "should help the market reach a balance" and recognised that negotiations had been "complex".

Not enough? 

The price of Brent crude, the European benchmark, surged 4.43 per cent on Friday to $62.7 as of 17:15 GMT.

But some said Friday's deal may not be enough to keep oil prices buoyant.

"I would describe the cuts as close but not close enough with regards to eliminating the global oil glut," said Stephen Brennock, oil expert at London brokerage PVM.

"A combined reduction of 1.5 million bpd was needed to avoid a supply surplus in the first half of next year," he told AFP.

"Accordingly, the price outlook for the coming few months still remains skewed to the downside despite today's knee-jerk reaction."

The deal was announced after Novak held bilateral meetings with several counterparts, including Iranian Energy Minister Bijan Namdar Zanganeh, before the full meeting.

However, the major players all had their own reasons to look to others to act first and the details of how any cuts will be shared out will be key.

Novak said that Russia, which leads the non-member countries in the so-called OPEC+ alliance, would introduce cuts "gradually" to allow for "climatic and technical conditions" but aimed to reach the cuts target "in the next few months”.

OPEC kingpin Saudi Arabia, meanwhile, had to bear in mind pressure from the United States after President Donald Trump demanded in a Tweet on Wednesday that the cartel boost output so as to lower prices and help the economy.

However, at Friday's press conference Saudi Energy Minister Khalid Al Falih sought to play down Trump's influence on the decision, saying: "Over 2018, I have met with consumers in Asia more often than I have read Tweets coming out of the White House."

India had also asked for action to bring down high oil prices, he said.

In addition, while admitting that "many consumers are suffering from the high cost of energy", Falih said: "I take the opportunity to plead with consumer nations to take it easy on their own people with taxation," claiming that this was the main driver of prices at the pump.

In June, OPEC and its partners agreed to allow for a boost in production by Saudi Arabia and Russia to compensate for the expected losses in output from Iran after the US dramatically withdrew from the Iran nuclear deal in May and decided to reimpose tough sanctions.

However, the US then granted temporary waivers to eight countries, including crucially China, to allow them to carry on importing Iranian oil, contributing to a plunge in oil prices which wiped out the gains seen since early 2017.

Ride-hailing company Lyft Inc. beat bigger rival Uber Technologies in filing for an initial public offering (IPO) on Thursday, defying the market jitters that threaten to upset a string of technology unicorns from going public next year.

Lyft’s IPO will be a big test of stock market investors’ appetite for companies that rely heavily on part-time workers. Much of its future hinges on its ability to replace drivers who move on after a few weeks or months when they find better paying jobs.

Lyft, last valued at about $15 billion in a private fundraising round, did not specify the number of shares it was selling or the price range in a confidential filing with the US Securities and Exchange Commission (SEC) on Thursday.

Lyft could go public as early as the first quarter of 2019, based on how quickly the SEC reviews its filing, people familiar with the matter said. Lyft’s valuation is likely to end up between $20 billion and $30 billion, one source added.

Lyft would follow a string of high-profile technology unicorn IPOs this year, such as Dropbox Inc. and Spotify Technology SA.

However, market turmoil fuelled by the escalating trade tensions between the United States and China could dampen enthusiasm for the debuts of other 2019 hopefuls like apartment-share service AirBnb Inc., analytics firm Palantir Technologies, Slack Technologies, a provider of chat services for businesses, and Stripe Inc., a digital payment company.

“Market declines mean that the offer price will be lower than otherwise. But there’s a danger of waiting to go public as well. Markets could go even lower, and the companies could raise less money if they waited longer,” said Jay Ritter, an IPO expert and professor at the University of Florida.

A key test for the US IPO market will come later on Thursday with the scheduled pricing of biotechnology start-up Moderna Inc.’s IPO. The company hopes to raise around $500 million.

Flag in the ground 

The filing by Lyft, which hired JPMorgan Chase & Co., Credit Suisse and Jefferies as underwriters, plants a flag in the ground to go public before larger rival Uber. The race between them is one of the most closely watched in Silicon Valley. Their bottom lines have taken hits in order to attract drivers and enter new markets, although they have managed in recent years to narrow their losses.

“The ‘cab-hailing-system’ has been antiquated and left as a dinosaur of yesteryears. The good news for ride-sharing is that it’s a market that has shown to be penetrable,” said Jeff Zell, senior research analyst and a partner at IPO Boutique in Florida.

“With autonomous cars on the horizon, it is anyone’s guess where this sector goes in the future. But Uber and Lyft, as name-brand leaders, are leading the race and will have the war chest to be major players for years to come.”

Lyft and Uber have held out the promise of boosting profitability by eventually replacing human drivers with robots piloting autonomous vehicles. 

It is not clear how quickly a future of cities and suburbs crisscrossed by fleets of self-driving cars will arrive, given the technical and regulatory challenges, particularly in the United States.

Lyft also will face competition from players such as Alphabet Inc.’s Waymo self-driving unit and General Motors Co.’s Cruise robo-taxi unit.

General Motors holds a 9 per cent stake in Lyft, which it acquired for $500 million in 2016. It has wound down its cooperation with Lyft, choosing to invest more in developing Cruise’s robo-taxi technology and services. 

Lyft was set up in 2012 by technology entrepreneurs John Zimmer and Logan Green, three years after Travis Kalanick co-founded Uber.

MOSCOW — Russian Internet giant Yandex on Wednesday launched its first ever smartphone in a highly anticipated move into hardware that builds on its popular service apps.

The company behind the most widely used search engine in Russia and the ex-Soviet region has recently diversified to defend its market share against Google. Like its US rival, it has created a range of popular phone apps for services from taxi-hailing to ordering takeaway food.

The new smartphone, called Yandex.Phone, will go on sale on Thursday in Russia and online. It will cost 17,990 roubles ($269) — less than similar phones from competitors Apple and Samsung — and will work with the Android system. 

While the design was created by Yandex, the phone is made in China.

Yandex’s various apps for payment, music, maps, taxi and food are pre-installed on the phone, which will also use a smart speaker called Alice (Alisa in Russian), which uses artificial intelligence and is similar to Amazon’s Alexa.

“We built Yandex.Phone to offer Russian users a smartphone that is equipped with all the localised tools that help users better navigate their daily routines,” Yandex official Fyodor Yezhov said.

“Within the smartphone, the Yandex apps are presented in the form of an ecosystem with Alice at its centre. It’s not necessary to open individual apps to solve a task — just ask Alice.”

New step 

The phone signals a major new phase in Yandex’s development and is designed to compete in Russia with giants like Apple, Samsung and Huawei.

This comes after Google has launched its own smartphone with mixed success and Facebook failed in its attempts to do so.

Yandex started in the 1990s as a search engine similar to Google but has expanded into every corner of the Russian internet.

The smartphone’s launch comes after the company last month disappointed tech enthusiasts by summoning journalists to what turned out to be a presentation not of the smartphone but of its smart speaker.

The Yandex smartphone is not the first to be developed by a Russian company. 

In 2013, the YotaPhone, designed in Russia but also made in China, was launched with the gimmick of having screens on both sides. However it failed to set the market alight.

This time the company behind the smartphone has much more clout. It is listed on the New York Stock Exchange and is renowned for its creative flair.

Tom Morrod, research director at IHS Markit, said that Yandex will not “be competing with iPhone or top-end models”.

“Non-hardware companies are often happy to take a mid-market position, not hoping to make money” from phone sales, Morrod said.

The phone will allow the company to “collect data on all aspects of a user — what they eat, what they listen to” and target them with ads, he said.

Yandex and its main Russian rival Mail.ru — which owns the country’s most popular social networking site VKontakte — are competing in the booming e-commerce sector as Russia faces pressure from Western sanctions and is turning towards China for joint projects.

Mail.ru recently announced a joint e-commerce venture with Chinese giant Alibaba while Yandex has linked up with Russia’s biggest consumer bank Sberbank for an e-commerce project valued at $1 billion.

DUBAI — Prices for Dubai's residential real estate went down 7.4 per cent in the third quarter of 2018 from a year earlier, with the drop accelerating from a 5.8 per cent fall in the second quarter, the United Arab Emirates central bank said in a report on Tuesday.

Prices have been falling quarter-on-quarter almost continually since the start of 2017 because of a worsening supply/demand balance. The central bank quoted the REIDIN residential sales price index, which showed that prices fell 2.5 per cent from the previous quarter in July-September.

Residential real estate prices in neighbouring Abu Dhabi, the other big emirate and the capital of the UAE, dropped 6.1 per cent year-on-year in the third quarter after a 6.9 per cent slide in the second quarter.

One factor weakening the demand for real estate is subdued employment growth in the UAE, particularly among white-collar workers who might buy homes. Most jobs in the wealthy oil-exporting country are held by foreigners.

Total employment grew just 0.6 per cent from a year ago in the third quarter — the slowest rate in over four years — after 1.2 per cent growth in the second quarter, the central bank said. 

In the first nine months of 2018, employment grew at an average rate of 1.6 per cent against a 2.6 per cent increase in the same period of 2017.

The central bank figures showed employment in sectors, including construction and real estate continuing to expand, partly because of Dubai's preparations to host the Expo 2020 World's Fair.

But employment in some sectors that generate large numbers of white-collar jobs, such as services, fell in the third quarter, in some cases at their fastest rates for several years.

In an effort to bolster white-collar numbers, the UAE government last week announced a scheme to offer long-term visas to rich property investors, senior scientists and entrepreneurs.

But eligibility for the visas is tightly restricted and they do not offer a path to UAE citizenship, so analysts said the scheme might do little by itself to change employment or real estate market trends.

DOHA — Qatar said on Monday it was quitting the Organisation of the Petroleum exporting Countries (OPEC) from January to focus on its gas ambitions.

Doha is one of OPEC's smallest oil producers but the world's biggest liquefied natural gas (LNG) exporter. Qatar said its surprise decision was not driven by politics but in an apparent swipe at Riyadh, Minister of State for Energy Affairs Saad Al Kaabi said: "We are not saying we are going to get out of the oil business, but it is controlled by an organisation managed by a country." He did not name the nation.

Kaabi told a news conference that Doha's decision "was communicated to OPEC" but said Qatar would attend the group's meeting on Thursday and Friday in Vienna, and would abide by its commitments.

He said Doha would focus on its gas potential because it was not practical "to put efforts and resources and time in an organisation that we are a very small player in and I don't have a say in what happens".

Delegates at OPEC, which has 15 members including Qatar, sought to play down the impact. But losing a long-standing member undermines a bid to show a united front before a meeting that is expected to back a supply cut to shore up crude prices that have lost almost 30 per cent since an October peak.

"They are not a big producer, but have played a big part in [OPEC's] history," one OPEC source said.

It highlights the growing dominance over policy making in the oil market of Saudi Arabia, Russia and the United States, the world's top three oil producers which together account for more than a third of global output.

Riyadh and Moscow have been increasingly deciding output policies together, under pressure from US President Donald Trump on OPEC to bring down prices. Benchmark Brent is trading at around $62 a barrel, down from more than $86 in October.

"It could signal a historic turning point of the organisation towards Russia, Saudi Arabia and the United States," said Algeria's former energy minister and OPEC chairman, Chakib Khelil, commenting on Qatar's move.

‘Unilateral decisions’

He said Doha's exit would have a "psychological impact" because of the row with Riyadh and could prove "an example to be followed by other members in the wake of unilateral decisions of Saudi Arabia in the recent past."

Qatar, which Kaabi said had been a member of OPEC for 57 years, has oil output of just 600,000 barrels per day (bpd), compared with Saudi Arabia's 11 million bpd.

But Doha is an influential player in the global LNG market with annual production of 77 million tonnes per year, based on its huge reserves of the fuel in the Gulf.

Kaabi, who is heading Qatar's OPEC delegation, said the decision was related to the country's long-term strategy and plans to develop its gas industry and increase LNG output to 110 million tonnes by 2024.

"A lot of people will politicise it," Kaabi said. "I assure you this purely was a decision on what's right for Qatar long term. It's a strategy decision." 

The exit is the latest example of Qatar charting a course away from its Gulf neighbours since the rift began last year. It comes before an annual summit of Gulf Arab states expected to grapple with the roughly 18-month standoff.

Once close partners with Saudi Arabia and the UAE on trade and security, Qatar has since struck scores of new trade deals with countries further afield while investing heavily to scale up local food production and ramp up military power.

"There is a sentiment in Qatar that Saudi Arabia's dominance in the region and the region's many institutions has been counterproductive to Qatar achieving its development goals," said Andreas Krieg, a political risk analyst at King's College London. "It is about Qatar breaking free as an independent market and state from external interference."

Oil surged about 5 per cent on Monday after the United States and China agreed to a 90-day truce in their trade war, but prices remain well off October's peak.

Asked if Qatar's withdrawal would complicate OPEC's decision this week, a non-Gulf OPEC source said: "Not really, even if it's a regrettable and sad decision from one of our member countries."

Amrita Sen, chief oil analyst at consultancy Energy Aspects, said the move "doesn't affect OPEC's ability to influence as Qatar was a very small player."

Kaabi said state oil company Qatar Petroleum planned to raise its production capability from 4.8 million barrels oil equivalent per day to 6.5 million barrels in the next decade.

Doha also plans to build the largest ethane cracker in the Middle East.

Qatar would still look to expand its oil investments abroad and would "make a big splash in the oil and gas business", he Kaabi added.

NEW YORK — US stocks finished a banner week on a positive note on Friday amid hopes of a US-China trade detente, as Microsoft overtook Apple in market value. 

The Dow Jones Industrial Average finished up 0.8 per cent to 25,538.46.

The broad-based S&P 500 also added 0.8 per cent at 2,760.16, along with the tech-rich Nasdaq Composite Index, which finished at 7,330.54.

All three major indices notched strong gains for the week, with the S&P 500’s gain of 4.8 per cent the best since December 2011.

On Friday, the leaders of the United States, Mexico and Canada signed a huge regional trade deal to replace the old North American Free Trade Agreement.

Trump also said that were “good signs” ahead of talks on Saturday with his Chinese counterpart Xi Jinping on the sidelines of a G-20 summit in Buenos Aires.

FTN Financial’s Chris Low said the signing of the North American trade agreement was “reassuring” but that many analysts were sceptical of a breakthrough on China. 

US stocks have been under pressure for much of the fall due to worries about higher Federal Reserve interest rates and slowing growth from the US-China trade fight.

But stocks gained this week, following a speech from Fed Chair Jerome Powell that investors viewed as dovish. 

Big movers in the Dow included Caterpillar, Intel and Coca-Cola, all of which gained about 3 per cent or more. Goldman Sachs was a laggard, dropping 2.2 per cent following a downgrade from Bank of America-Merrill Lynch.

Microsoft climbed 0.6 per cent to finish with a market capitalisation of $851.2 billion, edging out Apple by nearly $4 billion in value. It was the first time in eight years that Microsoft closed above Apple, which slipped 0.5 per cent.

Hotel chain Marriott International slumped 5.6 per cent after announcing that it suffered a hack of up to 500 million guests from the Starwood reservation database, which the company acquired in 2016.

General Electric fell 5.5 per cent after a Wall Street Journal report described a deepening US probe into accounting at the slumping conglomerate.

The article quoted one former employee who left the company out of concern that senior executives had not accounted for risk in an insurance division that went on to suffer a $15 billion shortfall.

BUENOS AIRES — Global leaders were expected to back an overhaul of the world body that regulates international trade disputes at a summit on Saturday, delegates said, ahead of high-stakes talks between US President Donald Trump and Chinese President Xi Jinping aimed at defusing a trade war.

A consensus appeared to be emerging at the two-day gathering of the Group of 20 industrialised economies for a joint statement that would back reforms to the crisis-stricken World Trade Organisation amid growing global trade tensions, according to officials from the European Union and summit host Argentina.

"We reiterate that the multilateral trading system is the framework in which we are all working and committed," an EU official said, referring to the language of a draft statement. 

The WTO is on the verge of becoming dysfunctional, just when it is most needed to fulfill its role as umpire in trade disputes and as the watchdog of global commerce.

The United States is unhappy with what it says is the WTO's failure to hold Beijing to account for not opening up its economy as envisioned when China joined the body in 2001.

To force reform at the WTO, the United States has blocked new appointments to the world's top trade court. The European Union is also pushing for reform at the WTO. 

G-20 summit delegates said that negotiations on producing a final statement were proceeding more smoothly than at a meeting of Asian leaders two weeks ago that ended without a consensus, but they cautioned that the draft statement still required approval from leaders. 

Trump said in a Tweet that he was cancelling a news conference at the G-20 summit as a mark of respect following the death of former President George H.W. Bush.

European officials said the draft document included a reference to climate change, which has proved a sticking point in the past with the current US administration. 

The wording on climate change was "a little bit more than the status quo but not backtracking," one EU official said.

With the United States and China locked in growing disputes over commerce and security that have raised questions about the future of their relationship, global financial markets next week will take their lead from the outcome of talks between Trump and Xi over dinner on Saturday.

The first day of the G-20 summit offered glimmers of hope for progress between Washington and Beijing despite Trump's earlier threat of new tariffs, which would increase tensions already weighing on the growth of the global economy.

But ahead of what is seen as the most important meeting of US and Chinese leaders in years, both sides said differences remained, and the outcome of the talks were uncertain.

This year's summit has proved to be a major test for the G-20, whose leaders first met in 2008 to help rescue the global economy from the worst financial crisis in seven decades.

With a rise in nationalist sentiment in many countries, the group, which accounts for two-thirds of the global population and 85 per cent of the global economy, faces doubts over its ability to deal with trade tensions and other geopolitical differences among its members.

Apart from trade and climate change, Russia's seizure of Ukrainian vessels has drawn condemnation from other G-20 members, while the presence of Crown Prince Mohammed Bin Salman at the summit has raised an awkward dilemma for leaders. 

Saudi Arabia's de facto ruler, who arrived amid controversy over the murder of Saudi journalist Jamal Khashoggi, has been ignored by other leaders at public events, although he has had a series of bilateral meetings with them in private.

Saudi Arabia has said the prince had no prior knowledge of the murder.