European and US stock markets rebounded Wednesday, helped by reports that China would accept a partial trade deal with the US in key talks this week.

The dollar was mixed while the pound steadied after yet more Brexit-fuelled volatility.

Crude oil prices, which had rallied over one percent as Turkey launched an offensive against Kurdish militants in northern Syria, trimmed gains after data showed US oil output at record levels and stocks rising.

China remains open to a limited trade deal as long as US President Donald Trump imposes no more tariffs, Bloomberg News and the Financial Times reported, citing people close to the upcoming talks.

In return, Beijing would offer non-core concessions such as purchases of US agricultural products, the reports added.

"This is likely contributing to the gains we're seeing in Europe... but unless the US is also willing to accept a limited deal -- and nothing currently suggests they are -- it may not lead to anything," noted Craig Erlam, senior market analyst at Oanda trading group.

"Traders are jumping at the prospect of good news at the moment but there's been so many false dawns in these negotiations, this may just be the latest," he told AFP.

With less than a week to go before the next round of punitive tariffs is due to hit, Beijing's top trade envoy Liu He will Thursday meet US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The pound is struggling to recover as fears grow that Britain will leave the EU on October 31 without a divorce deal
The pound is struggling to recover as fears grow that Britain will leave the EU on October 31 without a divorce deal AFP / Justin TALLIS

"Liu He is coming with real offers, it's not an empty visit," the FT quoted a source as saying.

"The Chinese are ready to de-escalate," the source, briefed on the talks, added.

Asian stock markets had mostly closed lower on Wednesday ahead of the reports of possible progress in the talks, which could extend into Friday and with Trump present.

Asia tracked losses in Wall Street and across Europe from Tuesday as investors fretted over signs the global economy is slowing.

The International Monetary Fund has forecast the weakest growth in a decade owing to the long-running tariff disputes.

With economic data increasingly weak, the fresh hopes sparked by the reports for Thursday's talks provided some much-needed support.

"But overall stock markets are still stuck in a violent see-saw... as investors try to position themselves ahead of the (talks)," IG chief market analyst Chris Beauchamp said.

Meanwhile oil prices shot 1.6 percent higher in European afternoon trading as Turkey began an offensive against Kurdish militants in northern Syria.

They later fell back on data from the Energy Information Administration showed production hitting a new record high while stocks rose more than expected.

Can a deal, even a limited one, be delivered?
Can a deal, even a limited one, be delivered? AFP / Mark RALSTON

"It is a little worrying that inventories are rising despite lower prices, as it suggests that demand is weak," said market analyst David Madden at CMC Markets UK.

Crude prices then later pushed higher once again.

Key figures around 1530 GMT

London - FTSE 100: UP 0.3 percent at 7,166.50 points (close)

Paris - CAC 40: UP 0.8 percent at 5,499.14 (close)

Frankfurt - DAX 30: UP 1.0 percent at 12,094.26 (close)

EURO STOXX 50: UP 0.8 percent at 3,459.50

New York - Dow: UP 0.5 percent at 26,295.86

Pound/dollar: UP at $1.2218 from $1.2213 at 2040 GMT

Euro/pound: UP at 89.85 pence from 89.69 pence

Euro/dollar: UP at $1.0979 from $1.0955

Dollar/yen: UP at 107.39 yen from 107.07 yen

Tokyo - Nikkei 225: DOWN 0.6 percent at 21,456.38 (close)

Hong Kong - Hang Seng: DOWN 0.8 percent at 25,682.81 (close)

Shanghai - Composite: UP 0.4 percent at 2,924.86 (close)

Brent North Sea crude: UP 1.4 percent at $59.05 per barrel

West Texas Intermediate: UP 1.6 percent at $53.49 per barrel