Risk rally hits the pause button as markets wait for trading signals by Reuters

By Ritvik Carvalho

LONDON (Reuters) – Global stock markets leveled off following a three-day rally on Wednesday as traders continued to look at incoming economic data and await new developments from US-China trade talks.

MSCI's All Country World Index () was flat on the day, up 1.3% since Friday.

The world's stock markets have stepped up against a reset of the recession amid growing optimism about a US-China trade deal this month and as global operations Studies indicate that the production sentiment has been hit.

France's benchmark index on 1

Investors said that stock markets consolidated gains over the last three sessions as the focus shifted to lingering concerns about the outcome of US-China trade talks.

Traders and investors hope a tentative Sino-US trade pact will roll back at least some of the tariffs that Washington and Beijing have imposed on each other's goods, but it is still uncertain when or where US President Donald Trump will meet Chinese President Xi Jinping to sign the agreement.

Some suggested markets had already discounted many good news.

"The optimism surrounding a US-China trade agreement has given a boost to global equities," wrote Simona Gambrani of Capital Economics in a note to clients.

"But with a lot of good news already slowing down and global economic growth likely to remain weak, we suspect further upside for stock prices will be limited."

European stocks rose higher, bolstered by gains in economic shares as investors analyzed a mixed bag of income reports. The pan-European STOXX 600 index () was higher by 0.1%. () The UK's FTSE 100 () index was flat, while Germany's DAX () and France's CAC 40 () were up 0.2% each.

Incoming financial data continued to show signs of improvement.

German industrial schemes rose more than expected in September, giving hope to producers in Europe's largest economy as they enter the fourth quarter following a tough spell.

The eurozone's business expanded somewhat faster than expected last month, but remained close to stagnation, according to a study whose forward-looking indicators suggest how little growth it can spread.

Earlier in Asia, MSCI's broadest index of Asia-Pacific shares outside Japan () eased 0.12%. Australian equities () were down 0.55%, Chinese equities () fell 0.25% and Japan's Nikkei index () rose 0.21%.

In currencies, the dollar dipped against a basket of currencies, down 0.2%. () The euro was higher by 0.1% at $ 1.1088. ()

The pound traded 0.1% higher to the dollar at $ 1.2887.

A survey showed that small British manufacturing companies are at their most pessimistic since just after the 2016 Brexit referendum as they face political uncertainty at home and trade war in a result that could provide clues to how next year's US presidential election could unfold, they claimed US Democrats upset Kentucky victory Tuesday and seized control of the Virginia state legislature.

Oil prices fell, pulled down by a larger-than-expected US crude oil bargain, after winning three sessions on expectations of easing US-China trade tensions. US crude () fell 0.72% to $ 56.82 per barrel and Brent crude () fell 0.92% to $ 62.38 per barrel.