London, June 22: European stock market rose Friday despite the eruption of a global trade war after Brussels slapped retaliatory tariffs on the United States.

Oil prices rallied before an output decision from the Organization of the Petroleum Exporting Countries, having dived the previous day on expectations that the cartel could lift its production ceiling at a key meeting Friday in Vienna.

The dollar fell against the euro and pound but gained versus the yen.

As European Union tariffs on key US goods — including jeans, bourbon and motorcycles — came into effect, there were fears China and the US will carry through with their own threats, locking the world's three biggest economies in a potentially destructive face-off.

The EU move was in retaliation to US President Donald Trump's decision to hit steel and aluminium imports from the bloc, as part of his “America First” protectionist policy that seeks to close big trade gaps with major world powers.

Washington and Beijing have meanwhile traded tit-for-tat threats on hundreds of billions of dollars worth of goods.

– 'Things about to get worse' –

“The underlying tensions between the US and China continue to escalate, and while neither wants a trade war, the US won't accept the status quo, and China won't change its industrial policy,” Rabobank senior strategist Michael Every told AFP.

“Hence things are about to get worse, in all probability,” he added, warning that markets had not priced in this possibility.

“Western markets are supposed to price for those kind of things, but it seems they are increasingly doing a bad job of doing so — then intermittently remember how to.”

World stock markets have endured a rollercoaster ride this week, as investors fretted over the deteriorating situation.

There are worries a full-blown flare up could pummel the global economy just as it is getting back on its feet after the global financial crisis.

Despite those concerns, Frankfurt stocks rose 0.4 percent, London added 0.7 percent and Paris won 0.8 percent approaching the half-way stage Friday.

“The US-EU trade dispute, when viewed alongside the US-China trade tensions, means that we are edging closer to a full-blown global trade war,” said John Ferguson, head of global forecasting at the Economist Intelligence Unit.

“The concern here is how Mr Trump responds — he may look to enact further tariffs or even subsidise US farmers who are likely to feel the brunt of the tariffs from US trading partners.

“Both of these moves from Mr Trump would likely lead to a further response from the EU, and this is how a trade war breaks out.”

Asia ended a tumultuous week on a cautious note, after Wall Street finished in the red overnight following the ominous exchange of trade threats between the US and China.

“A global trade war has been our top risk to the global economy for many months. Recent events have only confirmed that view,” added Ferguson.

 – Key figures around 1000 GMT –  

London – FTSE 100: UP 0.8 percent at 7,612.77 points

Frankfurt – DAX 30: UP 0.3 percent at 12,547.21

Paris – CAC 40: UP 0.7 percent at 5,352.38

EURO STOXX 50: UP 0.6 percent at 3,425.32

Tokyo – Nikkei 225: DOWN 0.8 percent at 22,516.83 (close)

Hong Kong – Hang Seng: UP 0.2 percent at 29,338.70 (close)

Shanghai – Composite: UP 0.5 percent at 2,889.76 (close)

New York – Dow Jones: DOWN 0.8 percent at 24,461.70 (close)

Euro/dollar: UP at $1.1642 from $1.1604 at 2100 GMT

Pound/dollar: UP at $1.3288 from $1.3240

Dollar/yen: UP at 110.13 yen from 109.99 yen

Oil – Brent Crude: UP $1.30 at $74.35 per barrel

Oil – West Texas Intermediate: UP 92 cents at $66.46

(AFP/APP)