SINGAPORE (AP) — Global stocks recovered on Tuesday as German leaders reached a surprise compromise on migration, putting to rest fears that the weeks-long dispute may topple Merkel’s fourth government.

KEEPING SCORE: Germany’s DAX rose 1.0 percent to 12,361.70 and France’s CAC 40 added 0.8 percent to 5,318.70 in early trading. Britain’s FTSE 100 gained 0.3 percent to 7,567.03. Wall Street was poised to open higher. Dow futures rose 0.3 percent to 24,363.00 and S&P 500 futures added 0.2 percent to 2,732.70. U.S. markets are scheduled to close early ahead of Wednesday’s Independence Day holiday.

ASIA’S DAY: Asian markets tumbled in the morning as back-and-forth exchanges over looming U.S. tariffs added to worries over the trade war brewing between China and the U.S. Hong Kong’s Hang Seng, reopening after a market holiday on Monday, closed 1.4 percent lower at 28,545.57 as investors reacted to weaker than expected Chinese economic data. The benchmark Nikkei 225 index lost 0.1 percent to 21,785.54 while South Korea’s Kospi added 0.1 percent to 2,272.76. The Shanghai Composite index gained 0.4 percent to 2,786.89. Australia’s S&P/ASX 200 rose 0.5 percent to 6,210.20 after the Reserve Bank of Australia kept its 1.5 percent benchmark interest rate unchanged.

GERMAN MIGRANT DEAL: On Monday, German chancellor Angela Merkel and her rebellious political allies reached a compromise on migration that both sides said addressed their concerns. After five hours of talks, they agreed to establish “transit centers” on Germany’s border with Austria where asylum-seekers would be evaluated and, if it turned out they already had applied for protection in another EU country, sent back to that country. Individuals who are rejected by those countries will be directed back into Austria “upon agreement” with Vienna. Merkel called the deal a “very good compromise.”

TRADE TENSIONS: The European Union on Monday slammed the Trump administration for considering higher tariffs on auto imports, saying they could lead to global retaliation against some $300 billion in U.S. goods. European Commission spokesman Margaritis Schinas said the U.S. investigation into the possibility of auto tariffs “lacks legitimacy, factual basis and violates international trade rules,” like last month’s U.S. tariffs on steel and aluminum imports. The EU has retaliated against those tariffs with measures of its own, which hit around 2.8 billion euros ($3.26 billion) worth of American-made products. President Donald Trump cited national security concerns for the previous tariffs. On Monday, Trump said the World Trade Organization has treated the U.S. “very badly” and the country will be “doing something” if the organization doesn’t change its ways. But he denied reports he plans to pull out of the WTO.

TARIFFS LOOM: The U.S. will start imposing a 25 percent tariff on $34 billion worth of Chinese imports this Friday. It won’t target 284 other items, worth $16 billion, until it gathers further public comments. China is expected to strike back with tariffs on a like amount of U.S. exports. The Trump administration is also identifying an additional $200 billion in Chinese goods for 10 percent tariffs, which could take effect if Beijing retaliates.

ANALYST’S TAKE: “The afternoon lift in Asia was reinforced by a positive move in European stocks, led by the German market as a compromise between Merkel and her interior minister on immigration eased fears of political turmoil,” said Eli Lee, head of investment strategy at the Bank of Singapore.

ENERGY: Oil futures recovered from the previous day’s downtick, after Trump claimed that Saudi Arabia could produce up to double of the 1 million barrels-a-day increase agreed by OPEC countries. Benchmark U.S. crude added 79 cents to $74.73 a barrel in electronic trading on the New York Mercantile Exchange. It fell 21 cents to settle at $73.94 a barrel on Monday. Brent crude, used to price international oils, gained 60 cents to $77.90. The contract lost $1.93 to close at $77.30 in London.

CURRENCIES: The dollar rose to 110.88 yen from 110.87 yen in late trading Monday. The euro rose to $1.1659 from $1.1639.

___ – Here are the top five things you need to know in financial markets on Tuesday, July 3:

1. Trump Moves To Block China Mobile’s U.S. Entry

The U.S. government has moved to block China Mobile from offering services to the U.S. telecommunications market, recommending its application be rejected because the firm posed national security risks.

State-owned China Mobile (HK:0941) is the world’s largest telecom carrier with 899 million subscribers.

Chinese foreign ministry spokesman Lu Kang, in response to a question about China Mobile at a daily briefing earlier today, said: “We urge the relevant side in the United States to abandon Cold War thinking and zero-sum games.”

The move by U.S. President Donald Trump’s administration to block China Mobile comes amid growing trade frictions between the two countries. The U.S. is set to impose tariffs on $34 billion worth of goods from China on Friday, which Beijing is expected to respond to with tariffs of its own.

2. Late-Session Rally In China Soothes Markets

China’s stocks clawed back losses in afternoon trading, and the yuan turned higher after sinking through a key level, spurring speculation that the People’s Bank of China (PBOC) stepped up efforts to calm jittery financial markets.

The Shanghai Composite ended 0.4% higher by the end of the day, after earlier plunging as much as 1.9% to a new two-year low.

Meanwhile, the yuan reversed higher after sliding through the 6.70-level per dollar, where traders and analysts had expected intervention from the central bank. It last traded at 6.6472 per dollar after earlier falling to 6.7161 (USD/CNY).

PBOC Governor Yi Gang reiterated earlier that China will keep the currency stable at an equilibrium level. That, and comments by another PBOC official earlier in the day, are the first clear statement on the currency by the central bank since the yuan slump intensified in mid-June.

Recent market action has suggested that so far China has been the big loser from the escalating trade conflict between the world’s two largest economies.

3. Dow Futures Rise 100 Points

U.S. stock futures pointed to a higher open, in what will be an abbreviated session ahead of the July 4th holiday.

At 5:30AM ET, the blue-chip Dow futures were up 100 points, or around 0.4%, the S&P 500 futures rose 9 points, or 0.3%, while the tech-heavy Nasdaq 100 futures indicated a gain of 26 points, or roughly 0.4%.

All three U.S. benchmarks on Monday managed to shake off early losses and end in positive territory.

Tuesday will be a half-day in the U.S. equity market, with the New York Stock Exchange closing trading for the day at 1:00PM ET.

Elsewhere, European markets were higher, with Germany’s DAX posting the best performance with a 1% gain after Chancellor Angela Merkel settled a row over migration in a last-ditch effort to save her government.

4. Dollar Dips As Euro Pushes Higher

Away from equities, the dollar eased marginally against its peers, as risk-sentiment improved after Chinese markets staged a late rally after tumbling overnight.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.2% at 94.40.

In the bond market, the U.S. 10-year Treasury yield ticked up one basis point to 2.88%, the highest in more than a week. Bond markets will also be closing early, with that market settling at 2:00PM ET.

On the data front, U.S. auto sales will be the main economic highlight on Tuesday, which is a half-day for markets ahead of the July 4th holiday. The May report on factory orders is also set for release in the morning.

Meanwhile, the euro pushed higher as political risk in Germany eased. It was last up 0.2% to 1.1665 (EUR/USD).

5. Oil Prices Rally As Supply Worries In Focus

Oil futures were higher, as investors pushed aside higher output concerns and refocused on supply disruptions after Libya declared force majeure on significant amounts of its crude.

Brent crude oil futures were at $77.85 per barrel, up 54 cents, or 0.7%, from their last close, while U.S. West Texas Intermediate crude futures were up 78 cents, or 1%, at $74.72.

The American Petroleum Institute is due to release its weekly report for the week ended June 29 at 4:30PM ET (2030GMT), amid forecasts for an oil-stock drop of around 3.2 million barrels.