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(Reuters) -U.S. stock index futures rose on Monday following Friday's pullback, as investors returned to risk assets after President Donald Trump's softer tone eased concerns over renewed U.S.-China trade tensions. Trump on Friday said he would impose an additional 100% tariff on China's U.S.-bound exports, along with new export controls on critical U.S.-made software in retaliation for Beijing tightening rare earth restrictions. The revived trade tensions sent the S&P 500 and the Nasdaq, both previously on track to register weekly gains, to suffer their steepest weekly declines in months. However, in a more conciliatory tone over the weekend, Trump posted that "it will all be fine" and the U.S. did not want to "hurt" China. China on Sunday blamed the U.S. for the escalation. However, Beijing did not roll out further countermeasures ahead of a potential meeting between Trump and his Chinese counterpart later this month, which the U.S. president threatened to cancel. "The path for markets in the near term depend heavily on the path escalation takes," analysts at UBS Global Wealth Management said in a note. "More generally, we think that the bull market remains intact and so pullbacks should offer an opportunity for investors, who are underallocated to equities, to consider adding long-term exposure." The AI-driven momentum and optimism around U.S. rate cuts have helped markets in the recent months. At 05:23 a.m. ET, Dow E-minis were up 448 points, or 0.98%, S&P 500 E-minis were up 89.75 points, or 1.36%, and Nasdaq 100 E-minis were up 462 points, or 1.89%. Investor focus is also on the earnings season that kicks off this week with major U.S. banks including JPMorgan Chase, Goldman Sachs, Citigroup, and Wells Fargo set to release quarterly results on Tuesday. The season will be a crucial litmus test for U.S. stock markets and it will provide fresh clues on the economy at a time when major official data releases remain delayed due to a government shutdown that is currently in its 13th day. In premarket trading, shares of "Magnificent Seven" companies rose following Friday's pullback. Nvidia was up 3.7%, Tesla gained 2.8%, Microsoft advanced 1.5%, while Meta and Alphabet rose 1.6% each. In the Middle East, Hamas handed over the first group of the last surviving Israeli hostages, a key step in ending two years of devastating conflict in Gaza as part of a ceasefire deal pushed by Trump. (Reporting by Sukriti Gupta in Bengaluru; Editing by Maju Samuel)

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NEW DELHI (Reuters) -India and the United States are set to hold trade talks this week, with New Delhi pledging to import U.S. energy and gas as it aims to address Washington's concerns over its Russian oil purchases, an official said. Talks were suspended briefly in August after the Trump administration announced tariff hikes of up to 50% on Indian goods, accusing India of financing Russia's war in Ukraine by continuing to buy Moscow's oil despite western sanctions. However, discussions resumed in September after U.S. President Donald Trump struck a conciliatory tone in public remarks and spoke to Prime Minister Narendra Modi on the phone, raising hopes for a breakthrough. The official, speaking on condition of anonymity because they were not authorised to speak to the media, said India was looking to increase purchases of energy and gas from the U.S. Indian officials held "constructive" talks with U.S. counterparts during a visit to Washington last month, the government said, and both sides agreed to continue discussions aimed at concluding a mutually beneficial trade deal soon. Negotiations between the two countries began in February 2025, targeting a deal to double bilateral trade to $500 billion by 2030. The two sides have held five rounds of trade talks, with the sixth postponed in August following tariff escalations. The official said both countries expect to sign the first tranche of the deal by next month, as initially agreed by Trump and Modi. (Reporting by Manoj Kumar; writing by Shilpa Jamkhandikar; Editing by Sudipto Ganguly and Kate Mayberry)

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By Samuel Shen and Summer Zhen HONG KONG/SHANGHAI (Reuters) -A sharp sell-off in China stocks faded in choppy trading on Monday, allowing the market to trim early losses, as investors reassessed the impact of a renewed trade war between Washington and Beijing after taking profit to cut risks. Analysts and fund managers believe the market downside will be limited compared to the panic-selling seen in April, when U.S. President Donald Trump kicked off a global trade war with sweeping tariffs across the board. The Shanghai Composite closed down 0.2%, after falling as much as 2.5% in early trade. The blue-chip CSI300 Index was 0.5% lower. In Hong Kong, the Hang Seng benchmark tumbled as much as 3.5% before recovering some losses to end down 1.5%. The Hang Seng Tech index lost 1.8%. Defying the broader selloff, however, China's rare earth sector, which is at the centre of revived trade tensions, jumped more than 6% to a record high, while semiconductor stocks also gained 2.6%. Trump on Friday unveiled additional levies of 100% on China's U.S.-bound exports, along with new export controls on critical software by November 1, in a reprisal against China curbing its critical rare earth exports. Later he softened tones on Sunday, posting that everything would be fine and the U.S. did not want to "hurt" China. "President Trump reminded everyone that there are lots of uncertainties for markets," said Ben Bennett, head of investment strategy for Asia at L&G Asset Management, based in Hong Kong. He expects near-term wobbles in Chinese stocks after the strong rally of the past few months. The Shanghai composite hovered around a decade high level before the Monday retreat. The Hang Seng index has jumped 30% so far this year. "We believe this is a tactical escalation (by Beijing) to shape pre-summit bargaining, not a strategic decoupling," Morgan Stanley analysts said in a note, referring to a potential meeting between President Xi Jinping and Trump at an upcoming APEC summit in South Korea. An upbeat surprise in China's exports and imports data also helped lift investment sentiment. Investors should not be distracted by political headlines, said Yeang Cheng Ling, DBS's chief investment officer for North Asia. "We believe rationality will prevail at the end of it," he said. VOLATILITY SPIKES To be sure, markets are likely to remain anxious in the short term given the rising geopolitical tensions. An index tracking expected 30-day volatility in the benchmark Hang Seng surged 30% at one point on Monday to its highest level since April 2025, before easing slightly. Oriano Lizza, sales trader at CMC Markets in Singapore said the market is still digesting how long this saga will go on for, which "leaves the market on tenterhooks and very fragile at the moment". China's 30-year bond futures rose on Monday, indicating the rush for safe-havens. The yuan clawed back some of the losses that followed Trump's announcement on Friday, helped by stronger central bank guidance. Wang Yapei, a Shanghai-based hedge fund manager, expects the turbulence to be short-lived, betting China and the U.S. will eventually work through negotiations, as "the cost of large-scale conflict is too high for both powers." Beijing described Trump's latest tariffs on Chinese goods as hypocritical on Sunday but clarified that its export control is not an export ban and stopped short of imposing new levies on U.S. products. "This is a de-escalation move and will cushion the downside for Chinese markets," said Hong Hao, chief investment officer at Lotus Asset Management. Investors are likely to rotate from growth to value stocks in the coming weeks, he added. Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management Co, said growing geopolitical uncertainty means China will likely further ease monetary policy to aid economic growth, supporting stocks. TACO AGAIN? China Merchants Securities said geopolitical tensions benefit Chinese sectors including artificial intelligence, robots, defence, innovative drugs and chipmaking. "Any correction would give long-term investors a chance to buy the stocks at lower prices," the brokerage said. But exporters sensitive to U.S. tariffs such as communications infrastructure, electric motors and electrical equipment, would be under pressure, analysts said. Many analysts, however, think the chance of a triple-digit tariff is slim. "This statement is more of Trump's signature negotiation tactic—applying maximum pressure to bolster bargaining leverage and force concessions during trade talks," Changjiang Securities said in a report. "It will likely again play out as TACO (Trump Always Chickens Out)." "In the near term, both sides are still reliant on one another…so we believe this latest escalation is more about posturing for incoming negotiations and meetings," said Lu Ting, Nomura's Chief China Economist, who sees "a decent chance" of a Xi-Trump in-person meeting during the APEC annual summit later this month. (Reporting by Summer Zhen in Hong Kong and Samuel Shen in Shanghai, Additional reporting by Rae Wee; Editing by Sam Holmes and Peter Graff)

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