Hong Kong's stock market closed up 3.0 percent in reaction, while Paris led the way in Europe, gaining 1.4 percent in midday deals.

The big gainer in the French capital was luxury giant LVMH, the maker of Louis Vuitton handbags, whose shares were up nearly seven percent.

The dollar rallied against the euro, yen and British pound, while oil prices jumped around three percent.

"The market was not expecting the big change to US and China tariff rates, which is very positive for the outlook for the US and the global economy," said Kathleen Brooks, research director at traders XTB.

"The impact of tariffs on growth will now need to be revised lower, which is boosting the dollar... Safe havens like gold are also seeing demand slip away," she told AFP.

Investors have been on a rollercoaster ride since US President Donald Trump unveiled eye-watering tolls on trading partners on April 2, with the heftiest saved for Beijing, raising concerns of a trade war between the economic superpowers.

Trump had hiked the measures against China to 145 percent, which were met with retaliatory rates of 125 percent.

However, after two days of highly anticipated negotiations in Geneva, the two countries hailed progress towards ending a crisis that fuelled fears of a global recession.

In a joint statement, the United States said it would reduce tolls to 30 percent while Chinese tariffs on American goods would be cut to 10 percent.

"The 90-day period may not be sufficient for the two sides to reach a detailed agreement, but it keeps the pressure on the negotiation process," said Tai Hui, Asia-Pacific chief market strategist at JP Morgan Asset Management.

Karsten Junius at Bank J. Safra Sarasin urged caution.

"We expect financial markets to remain volatile over the coming months, as they have almost fully priced out negative economic surprises and could once again be disrupted by more serious obstacles in trade negotiations," he noted.

"In all likelihood, things may still get worse before they get better."

Investors are awaiting the release this week of data on US inflation and retail sales, which will provide a fresh snapshot of the world's biggest economy since the tariffs were first unveiled.

- Key figures at around 1035 GMT -

Paris - CAC 40: UP 1.4 percent at 7,854.52 points

Frankfurt - DAX: UP 1.0 percent at 23,729.29

London - FTSE 100: UP 0.4 percent at 8,586.52

Tokyo - Nikkei 225: UP 0.4 percent at 37,644.26 (close)

Hong Kong - Hang Seng Index: UP 3.0 percent at 23,549.46 (close)

Shanghai - Composite: UP 0.8 percent at 3,369.24 (close)

New York - Dow: DOWN 0.3 percent at 41,249.38 (close)

Euro/dollar: DOWN at $1.1082 from $1.1257 on Friday

Pound/dollar: DOWN at $1.3155 from $1.3308

Dollar/yen: UP at 148.57 yen from 145.31 yen

Euro/pound: DOWN at 84.22 pence from 84.57 pence

Brent North Sea Crude: UP 2.9 percent at $65.72 per barrel

West Texas Intermediate: UP 3.0 percent at $62.88 per barrel

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INDEX CORP.

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