China's Xi injects hope into trade war with U.S.

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It's the spat that has had global investors and businesses on edge for more than a year - a trade war between the world's two biggest economies.

After numerous stops and starts - some optimism this Friday coming out of Beijing.

Chinese President Xi Jinping said he wants to work out an initial trade pact with the U.S. and said China has been trying to avoid a further escalation.

But there's a caveat. Xi told representatives of an international forum: any agreement on the so-called phase one deal must be "on the basis of mutual respect and equality."

And if necessary "we will fight back."

And he added: "We did not initiate this trade war and this is not something we want."

Financial markets interpreted his comments as more conciliatory than the ones made by President Trump earlier this week.

SOUNDBITE (ENGLISH) U.S. PRESIDENT DONALD TRUMP, SAYING:

"China would much rather make a trade deal than I would."

SOUNDBITE (ENGLISH) REPORTER OFF-CAMERA ASKING:

"Then why haven't they?"

SOUNDBITE (ENGLISH) U.S. PRESIDENT DONALD TRUMP, SAYING:

"Because I haven't wanted to do it yet."

SOUNDBITE (ENGLISH) REPORTER OFF-CAMERA ASKING:

"And why haven't you wanted to?"

SOUNDBITE (ENGLISH) U.S. PRESIDENT DONALD TRUMP, SAYING:

"Because I don't think they are stepping up to the level that I want."

Trump seemed to soften that rhetoric Friday, telling Fox News that when it comes to a deal the sides were "potentially very close."

Friday's comments by both leaders is leading to a modest improvement in market sentiment - sending stocks on an upswing Friday...

But concerns earlier this week of a breakdown between Beijing and Washington have put U.S. and European stocks on track for their first weekly drop in seven weeks.