Introduction: US-China trade talks resume in London
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
Trade talks between the US and China are set to resume in London today, as officials push for a breakthrough over shipments of technology and rare earth elements.
After more than six hours of talks on Monday, negotations will resume at Lancaster House later this morning. Investors are hopeful of a breakthrough that could continue to ease tensions between the two economic superpowers.
President Donald Trump has indicated that the first day of talks were encouraging. He told reporters that “We are doing well with China. China’s not easy….I’m only getting good reports.”
The US are unhappy that China has not released crucial rare earth minerals, and magnets, as rapidly as hoped since the two countries agreed an initial trade pact in Geneva a month ago.
Treasury secretary Scott Bessent told reporters in London they had a “good meeting”, Bloomberg reports, while commerce secretary Howard Lutnick called the discussions “fruitful.”
The agenda
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7am BST: UK labour market report
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10.15am BST: FCA CEO Nikhil Rathi and FCA chair Ashley Adler testify to Treasury Committee
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2.30pm BST: World Bank to release latest economic forecasts
Key events
Small business confidence picks up in the US
US small-business confidence improved last month, as bosses welcomed the de-escalation in trade tensions between Washington and China.
The National Federation of Independent Business has reported that its Small Business Optimism Index increased three points to 98.8 last month, rising for the first time since December.
NFIB Small Business Optimism Index jumps to the highest since February
the net percent of owners expecting better business conditions rose 10 points from April to 25 pic.twitter.com/W20g9OKRI3
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) June 10, 2025
The improvement was driven by a pick-up in business conditions and sales expectations.
NFIB chief economist Bill Dunkelberg says:
Although optimism recovered slightly in May, uncertainty is still high among small business owners. While the economy will continue to stumble along until the major sources of uncertainty are resolved, owners reported more positive expectations on business conditions and sales growth.
The commerce ministers of the US and China have both arrived for day two of their trade talks:
Lutnick: US-China trade talks are going well
US commerce secretary Howard Lutnick has told reporters that trade talks with China that are taking place in London were going well, Reuters reports.
Lutnick also indicated that the meeting at Lancaster House is expected to last all day today.
Reminder: the two sides talked for over six hours yesterday, with Monday’s deliberations fuelled by a supper from one of Yotam Ottolenghi’s restaurants:
Back in the City, Marks & Spencer is helping to push the FTSE 100 share index towards a new record high.
M&S shares are among the top risers this morning, up 3.7%, after it resumed online orders after its recent cyberattack.
But rival Next is pulling the index the other way! Next’s shares are down 2%, making it the top faller – traders may be concluding that its short-term sales boost from M&S’s disruption is now over…
US-China trade talks resume
Lisa O’Carroll
Chinese and US leaders have resumed talks at London’s historic Lancaster House for a second day to try and resolve the trade dispute triggered by Donald Trump’s imposition of tariffs on all imports from the country.
Select outlets including Fox News, Chinese TV, the BBC and Bloomberg but not the Guardian, Sky News or LBC, have been allowed inside the security perimeter, to record any press briefing that may take place later today.
There are expectations there may be some sort of truce in relation to China’s export restrictions on rare earths and the US’s restrictions on the export of semi-conductors from the US to China, but not an overall deal on the 145% tariffs imposed by the US [currently lowered to 10% under the temporary truce agreed last month].
China, like 60 other countries, is currently in “negotiations” on tariff deals but rare earths and critical raw materials crucial for military, auto and medical sectors across the world are just one of Trump’s challenges.
He is also seeking to control the import of cheap Chinese steel and aluminium products with critics warning the reduction in supply is already hitting manufacturing in the US.
Photos: Officials return for US-China trade talks
Most European markets have edged high this morning as investors patiently waited for news on US/China trade talks,” says Russ Mould, investment director at AJ Bell.
“Where there is still a sense of cautiousness around how to position portfolios for the longer term, there were enough corporate news flow to spur trading in a range of stocks.
“UK housebuilders were at the top of the wish list for many investors after Bellway reported ‘robust’ spring trading. It was enough to drive a rally in the sector, putting the likes of Persimmon, Barratt Redrow and Taylor Wimpey at the top of the FTSE 100 risers’ list.
“The blue-chip UK index moved 0.4% higher to 8,868, helped by strength in energy producers Shell and BP amid oil price resilience, and Rolls-Royce moving up on success with its nuclear operations.”
The UK stock market rally is also being driven by bargain-hunting investors.
“UK stocks are among the cheapest in Europe,” said Georges Debbas, head of European equity derivatives strategy at BNP Paribas Markets 360 (via Bloomberg).
Debbas added:
“The country is also the most friendly to the US, as it’s the only one to have a firm trade agreement in place. That allows you to have a more constructive view on the market.”
US-China trade talks are the main focus for investors as they continue in London after a “fruitful” session on Monday, reports Neil Wilson,UK investor strategist at Saxo Markets:
It’s hoped that the deal with see the US ease export restrictions of chips while China will release its rare earth minerals. A good outcome could send Wall Street to a fresh record high, with the S&P 500 finishing marginally higher on Monday a few points above the 6k level.
Apparent concessions for Western automakers last week suggest a deal is in the offing.
FTSE 100 heading towards record high
In the City, the London stock market is heading back towards its alltime high.
The FTSE 100 share index has gained 41 points, or nearly 0.5%, in early trading to 8874 points – slightly above its previous record closing high.
The Footsie’s record intraday high, 8,908.8 points, was set in early March, before trade war fears send shares tumbling.
Shares have recovered since slumping in early April (when the index fell as low as 7544 points), as Donald Trump cheered traders by pausing or reversing aspects of his trade war.
Housebuilders are leading the risers this morning, after Bellway reported “robust trading through the spring selling season” this morning. Bellway raised its outlook for volume output and average selling price this year
Jason Honeyman, Bellway’s chief executive, says:
“Bellway has delivered a solid trading performance, and we are on track to deliver strong growth in volume output and profits in the full financial year. We have a healthy forward order book and outlet opening programme, which will serve as a platform for further growth in FY26.
I remain confident that, supported by the Group’s operational strengths, land bank depth and an increased focus on cash generation and capital efficiency, Bellway can capitalise on the positive fundamentals of our industry and deliver volume growth, improved returns and ongoing value creation for shareholders.”
In other trade news, China has extended a high-profile investigation into imported pork from the European Union by six months.
The extension comes just days before the probe, which began a year earlier, was due to wrap up.
China has decided to extend the investigation period to December 16 due to the “complexity” of the case, the country’s commerce ministry said in a statement on its website.
The probe began last summer, after the EU imposed provisional tariffs on Chinese EV imports coming into the bloc.
UK unemployment rises: political reaction
Minister for employment Alison McGovern has insisted that the government is making progress in helping people into work:
“Six months after we launched Get Britain Working, we are already seeing the benefits with economic activity at a record high, with 500,000 more people in employment since we entered office and real wages growing more since July than in the decade after 2010.
“People all over the country are benefiting from increased training opportunities and the newly launched Jobs and Careers Service will allow us to test new and innovative approaches to personalise employment support.”
But, shadow business secretary Andrew Griffith blamed the increase in companies’ national insurance payments for the rise in joblessness:
“It is disappointing but no surprise that unemployment is up again.
“Businesses are still absorbing a £25 billion jobs tax but things are about to get even worse as Labour’s £5 billion unemployment bill hits businesses with higher regulation.”
Liberal Democrat treasury spokeswoman Daisy Cooper also criticised the rise in employers’ NICs payments:
“These figures could not be a clearer signal to the Chancellor ahead of the spending review that the Government must change course.
“The Chancellor’s pig’s ear of a jobs tax is crushing the growth potential of our high streets and small businesses, pushing people out of work, and ramping up the benefits bill.
“This week, instead of pursuing another round of devastating departmental cuts, the Government needs to take the handbrake off our economy and go for growth.”
