Financial numbers flow on the digital ticker tape at the TMX Group in Toronto's financial district on May 9, 2014. THE CANADIAN PRESS/Darren Calabrese

North American stock markets closed higher Monday as fears of a trade war between the United States and China eased to allow markets to regain some ground lost Friday.

The recent spate of volatility from the trade war concerns, which saw U.S. President Trump suggest tariffs on another US$100 billion in Chinese goods late last week, eased Monday as talk of negotiations continued said Craig Fehr, a Canadian markets strategist at Edward Jones in St. Louis.

"What we're getting is a bit of a relief rally in equities where the fault lines of an evolving trade war have moved down a rung on the risk ladder, at least for today," said Fehr.

"Markets are finding some comforts that over the weekend we at least didn't see an escalation in the back and fourth retaliatory measures between the US and China."

The S&P/TSX composite index closed up 20.29 points at 15,227.70, led by consumer staples and financials.

In New York, the Dow Jones industrial average closed up 46.34 points at 23,979.10. The S&P 500 index was up 8.69 points at 2,613.16 and the Nasdaq composite index was up 35.23 points at 6,950.34.

Monday's rise from the reprieve in tensions, however, doesn't mean the trade issue is going away, said Fehr.

"I think it's far too early to get overly optimistic about this. I think markets are likely going to endure ongoing volatility on this as we see the ebb and flow between progress and roadblocks along the way."

Signals of progress on NAFTA, including Mexican officials expressing some confidence a deal could be reached, is also providing optimism to the market, said Fehr.

"The markets are finding a bit of comfort in that, particularly because the principal driver to the downside over the last several weeks has obviously been the fears of an escalating trade war."

And while trade issues continue to simmer, Fehr said continued focus on China has also helped boost optimism that a NAFTA deal could be reached before too long.

"It's become clear in recent weeks that the U.S. is focused on renegotiations and new trade deals with China, and perhaps that means that less of the focus gets put on changes to NAFTA."

The Canadian dollar averaged 78.56 cents US, up 0.21 of a US cent, as a Bank of Canada survey showed Canadian firms remain upbeat about future sales, business investment and hiring. The quarterly poll of about 100 firms found business sentiment has stayed positive and above historical averages despite the trade worries.

The dollar was also boosted by the May crude contract, which ended up US$1.36 at US$63.42 per barrel. The May natural gas contract was down one cent at US$2.69 per mmBTU.

The June gold contract closed up US$4 at US$1,340.10 an ounce and the May copper contract was up two cents at US$3.08 a pound.

The energy sector ended down on the TSX despite the rise in crude prices, as tensions rose over the fate of Kinder Morgan Canada's Trans Mountain expansion project.

The company said Sunday it was suspending all non-essential work and spending on the $7.4 billion project until it has more confidence it could go forward, setting a May 31 deadline to have the impasse with British Columbia resolved.

Kinder Morgan's action prompted Alberta Premier Rachel Notley to promise to move forward with legislation to control oil and gas flows to B.C., while both the Alberta and federal governments talked of financially backing the project more directly. The company's stock price ended down 12.85 per cent to $16.12 Monday on the TSX.

News from © The Canadian Press, 2018