LONDON (Reuters) – European shares rose on Wednesday, as initial dismay at U.S. President Donald Trump’s decision to cancel fiscal stimulus negotiations with lawmakers in Washington was replaced by optimism about an aid package after the U.S. elections.

Trump broke off talks with Democrats in a tweet, saying that negotiations will stop until after the Nov. 3 election, when he promised a major stimulus bill if he wins.

The news quickly rattled Wall Street but Asian investors became less concerned overnight on the grounds that whoever wins the election will still introduce a fiscal stimulus bill.

Asian stocks hit two-week highs and European shares, which opened slightly in the red, quickly rose, helped by upbeat earnings reports.

The STOXX 600 was up 0.2% on the day by 0757 GMT and London’s FTSE 100 was up 0.1%.

MSCI world equity index, which tracks shares in 49 countries and had climbed to a three-week high before the stimulus talks were cancelled, was up 0.1%.

U.S. stocks were also set to rebound when Wall Street opens, with S&P 500 futures up 0.6%, helped by later tweets by Trump where he called for more fiscal support.

“Even if a pre-election deal cannot be reached, Biden’s widening lead in the election polls is making it likelier that more substantial stimulus can eventually be agreed on,” UBS strategists wrote in a note to clients.

“Indications of a more decisive election result may also reduce investors’ concerns about a protracted and contested outcome,” they added.

A poll on Monday showed Democrat Joe Biden with his widest lead in a month, as a majority of Americans said Trump could have avoided coronavirus.

Deutsche Bank strategists also wrote that markets were instead focusing on the prospect of more fiscal stimulus in the case of a clean sweep Democratic victory.

FILE PHOTO: World Bank Group President David Malpass attends a news conference after a meeting at the Chancellery in Berlin, Germany October 1, 2019. REUTERS/Hannibal Hanschke

BERLIN (Reuters) – The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday.

“It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview.

“It is important that the amount of debt is reduced by restructuring,” Malpass added.

He pointed to similar steps in previous financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.

Rich countries last month backed an extension of the G20’s Debt Service Suspension Initiative (DSSI), approved in April to help developing nations survive the coronavirus pandemic, which has seen 43 of a potential 73 eligible countries defer $5 billion in “official sector” debt payments.

Amid warnings the pandemic could push 100 million people into extreme poverty, Malpass renewed his call for private banks and investment funds to get involved too.

“These investors are not doing enough and I am disappointed with them. Also, some of the major Chinese lenders did not get enough involved. The effect of the aid measures is therefore less than it could be,” the World Bank head said.

Malpass warned that the pandemic could trigger another debt crisis as some developing countries had already entered a downward spiral of weaker growth and financial trouble.

“The enormous budget deficits and debt payments are overwhelming these economies. In addition, the

BERLIN (Reuters) – The COVID-19 pandemic could trigger a debt crisis in some countries, so investors must be ready for granting some form of relief that could also include debt cancellation, World Bank President David Malpass was quoted as saying on Sunday.

“It is evident that some countries are unable to repay the debt they have taken on. We must therefore also reduce the debt level. This can be called debt relief or cancellation,” Malpass told Handelsblatt business daily in an interview.

“It is important that the amount of debt is reduced by restructuring,” Malpass added.

He pointed to similar steps in previous financial crises such as in Latin America and the so-called HIPC initiative for highly indebted countries in the 1990s.

Rich countries last month backed an extension of the G20’s Debt Service Suspension Initiative (DSSI), approved in April to help developing nations survive the coronavirus pandemic, which has seen 43 of a potential 73 eligible countries defer $5 billion in “official sector” debt payments. [nL5N2GL6KB]

Amid warnings the pandemic could push 100 million people into extreme poverty, Malpass renewed his call for private banks and investment funds to get involved too.

“These investors are not doing enough and I am disappointed with them. Also, some of the major Chinese lenders did not get enough involved. The effect of the aid measures is therefore less than it could be,” the World Bank head said.

Malpass warned that the pandemic could trigger another debt crisis as some developing countries had already entered a downward spiral of weaker growth and financial trouble.

“The enormous budget deficits and debt payments are overwhelming these economies. In addition, the banks there are getting into difficulties due to bad loans,” Malpass added.

(Reporting by Michael Nienaber; Editing by Peter Cooney)

Copyright 2020 Thomson Reuters.