Stock markets LIVE: FTSE forecast to soar 12.3% as Lloyds and Barclays shares make gains

London's FTSE 100 at 8.45am was up 91.71 at 7793.79. Among the biggest risers were Rolls Royce (+4.69%), IAG (4.28%) and BAE Systems (+3.71%).

Fallers included BT (-2.62%), Standard Chartered (-1.75%) and HSBC (-1.07%).

The brief flutter of excitement yesterday when rumours circulated that Trump was about to pause tariffs (excluding China) temporarily resulted in a "big but brief" rally in US markets. While the White House quickly squashed those rumours, Russ Mould, investment director at AJ Bell, said: "It was enough of a window into what might happen with markets if Trump was more accommodating."

"The Nasdaq ended the day with a very small gain, while the S&P 500 was only down 0.2%. It suggests investors are slowly regaining confidence, perhaps in the belief that an actual breakthrough on tariffs – either a temporary pause or positive negotiations – could unleash the mother of all rebound rallies.

“It’s dangerous to think a massive rally will definitely happen, given how Trump is unpredictable, but the ‘just imagine’ thought will now be firmly engrained in investors’ minds."

He urged investors to "take each day as it comes", before warning: "Markets could stay fragile for days and weeks to come. It would only take a new sign of aggression from Trump or a trading partner fighting back hard to cause upset again. Market recoveries can quickly lose momentum if investors lose faith in a remedy to the situation that caused the original sell-off.”

Gold prices rebounded on Tuesday after concerns over a global trade war increased investor's appetite for the safe-haven asset.

According to Reuters, spot gold gained 0.8% to $3,005.38 an ounce as of 0605 GMT. On Monday, bullion hit its lowest level since March 13. Meanwhile, US gold futures rose 1.6% to $3,019.60.

Jigar Trivedi, senior analyst at Reliance Securities said: "Despite slipping in the previous sessions, gold is still strong and should remain on the upward trend" because of the bullish undertone.

Japan's Prime Minister Shigeru Ishiba has met with his Cabinet to discuss how to respond to the US tariffs, after speaking by phone late on Monday with President Trump.

Mr Ishiba has appointed economy minister Ryosei Akazawa as Japan's trade negotiator with the US, according to Chief Cabinet Secretary Yoshimasa Hayashi.

The appointment was based on an agreement between Mr Ishiba and Mr Trump, Mr Hayashi added.

Mr Trump's decision to impose a 25% levy on auto imports and a reciprocal 24% tariff on other Japanese goods, would deal a massive blow to the export-heavy economy.

Analysts have predicted the higher duties could knock up to 0.8% off economic growth, according to Reuters.

Japan's prime minister has also sent senior officials from his foreign and trade ministries to Washington DC to follow up on his conversation with Mr Trump.

Mr Hayashi said Mr Ishiba is mulling travelling to the US for direct talks with Mr Trump at an appropriate time.

China has responded to President Donald Trump's threats to impose an additional 50% tariff on the country's imports.

The Agence France Presse (AFP) news agency quoted China’s commerce ministry saying: "The US threat to escalate tariffs against China is a mistake on top of a mistake, which once again exposes the US’s blackmailing nature.

"China will never accept this. If the US insists on going its own way, China will fight it to the end.

"If the US escalates its tariff measures, China will resolutely take countermeasures to safeguard its own rights and interests."

Last week, President Trump imposed 10% tariff on all imports from around the world, with higher rates for certain countries with a higher trade deficit.

China's rate was set at 34%, with some goods, such as cars, rising to 54%.

China retaliated by imposing a 34% tariff on US goods, which will take effect this Thursday. President Trump then threatened an additional 50% tariff if Beijing did not withdraw its counter-tariff.

This means US companies could face a total rate of 104% on Chinese imports.

Matt Britzman, Senior Equity Analyst at Hargreaves Lansdown, said investors are waking up to a positive sight for once, with markets opening higher across a broad range of European indices and the FTSE 100 up 0.9% at the open.

He cautioned: "However, this should hardly be seen as the end of the trouble, especially with President Trump showing no signs of easing his stance on perceived trade imbalances, having doubled down on China.

"Still, there is a glimmer of hope, as Japanese markets are up nearly 6% following news that trade talks will begin in a few days. The sooner deals are reached, the quicker companies and investors can gain some clarity on the lay of the land."

Asian markets have opened higher today, with Japan’s Nikkei 225 benchmark shooting up more than 6% after it fell nearly 8% the day before.

The rebound followed a wild day on Wall Street as US stocks tanked after Donald Trump threatened to crank his double-digit tariffs even higher.

Hong Kong also recovered some lost ground, but nothing close to its 13.2% dive on Monday which gave the Hang Seng its worst day since 1997 during the Asian financial crisis. The Hang Seng gained 1.7% to 20,163.97 this morning.

The Shanghai Composite index jumped 0.8% to 3,121.72, South Korea’s Kospi gained 1.6% to 2,364.22, and the S&P/ASX 200 also was up 1.6%, at 7,462.60.

The FTSE 100 index has opened at 7702.08.

Good morning and welcome to our live coverage of today's market movements and all the latest on Donald Trump's trade tariffs.