Following two days of talks in London, top US and Chinese negotiators announced a "framework" agreement late Tuesday that included Chinese concessions on rare earth materials along with Washington allowing Chinese students to study at US universities.

But stocks fell in what Briefing.com called a "sell the news" response to the announcement, which it also dismissed as short of "groundbreaking."

"The two sides agreed to implement what was already agreed upon during a mid-May meeting in Switzerland," Briefing.com said.

Treasury Secretary Scott Bessent warned a broader deal with China would take a "longer process," saying it was possible to rebalance economic ties with Beijing only if Beijing proved a "reliable partner in trade negotiations."

And for partners "negotiating in good faith," Bessent told a congressional committee, there could be an extended pause before higher threatened tariff rates take effect in July.

The broad-based S&P 500, which rose the last three days, finished down 0.3 percent at 6,022.24.

Elsewhere, London edged higher, supported by the government laying out its spending plans. But Paris and Frankfurt couldn't hold on to early gains and closed modestly lower.

Asian stock markets also won a lift on the China-US progress, with Hong Kong among the best performers.

"Constructive talks between the US and China have put markets on a firmer footing, as investors hope that the worst of the tariff turbulence may have passed," said Richard Hunter, head of markets at Interactive Investor.

Meanwhile, data showed little impact of Trump's tariffs on US consumer prices in May. Some analysts said it was still too early to discern a hit to prices from tariffs.

Between April and May, the consumer price index (CPI) rose 0.1 percent. Analysts had expected it to continue at the 0.2 rate it rose in April.

Following the release of the data, Trump issued a fresh call for the Fed to lower interest rates.

Investors have worried that a tariff-driven surge in inflation could hinder the Federal Reserve from lowering interest rates to counter the slowdown in growth.

In other markets, oil prices shot up more than four percent as Iran threatened to target US military bases in the region if conflict breaks out.

Amid escalating tensions, a US official said staff levels at the embassy in Iraq were being reduced over security concerns, while the UK Maritime Trade Operations, run by the British navy, advised ships to transit the Gulf with caution.

- Key figures at around 2030 GMT -

New York - Dow: FLAT at 42,865.77 (close)

New York - S&P 500: DOWN 0.3 percent at 6,022.24 (close)

New York - Nasdaq Composite: DOWN 0.5 percent at 19,615.88 (close)

London - FTSE 100: UP 0.1 percent at 8,864.35 (close)

Paris - CAC 40: DOWN 0.4 percent at 7,775.90 (close)

Frankfurt - DAX: DOWN 0.2 percent at 23,948.90 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 38,421.19 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 24,366.94 (close)

Shanghai - Composite: UP 0.5 percent at 3,402.32 (close)

Euro/dollar: UP at $1.1489 from $1.1425 on Tuesday

Pound/dollar: UP at $1.3545 from $1.3500

Dollar/yen: DOWN at 144.62 yen from 144.87 yen

Euro/pound: UP at 84.79 pence from 84.62 pence

Brent North Sea Crude: UP 4.3 percent at $69.77 per barrel

West Texas Intermediate: UP 4.9 percent at $68.15 per barrel

burs-jmb/des

INDEX CORP.

Dow