Asian stocks and European stock futures surged on Thursday, joining the relief rally over a 90-day reprieve on most new U.S. tariffs, but that policy reversal excluded China, where an intensifying trade war signalled more trouble ahead for markets.

Indeed, the dollar struggled to hold overnight gains, particularly against the safe-haven yen and Swiss franc, and U.S. stock futures turned lower after a brief early rally, a potential warning of wavering investor confidence in the U.S. economy.

As economists at J.P. Morgan put it, this is "merely the end of the beginning", and the U.S. war on trade is far from over.

Wall Street indexes logged their largest daily percentage gains in more than a decade overnight, relieved that, with U.S. President Donald Trump's latest U-turn on tariffs, global trade was no longer about to grind to a complete halt.

But the gloves have come off between the world's two trade powerhouses, with Trump dealing an explicit blow to China by raising the levy on Chinese imports to 125%, up from the 104% duty that came into effect on Wednesday.

China had raised additional duties on American products to 84% and imposed restrictions on 18 U.S. companies.

By contrast, Vietnam - a huge beneficiary of global manufacturers' "China plus one" strategy that aims to diversify supply chains - said on Thursday it had come to an agreement with the United States to launch negotiations for a trade pact.

Chinese stocks opened on a strong note on Thursday and Hong Kong's Hang Seng Index (.HSI), opens new tab surged 4%, even as the onshore yuan tumbled to its weakest level in more than 17 years.

Some analysts attributed the rise to hopes for talks between the world's two largest economies, as well as support from Beijing for the markets and the economy.

A manic bond selloff also stabilised on Thursday as U.S. Treasury yields retreated, after heavy selling in the previous sessions had reignited fears of fragility in the world's biggest bond market.

A line chart titled "How US markets have performed over the past year" that compares the change in the prices over a recent period.

In other news, the March report on U.S. inflation is due later on Thursday, although it will likely be of less importance to markets given the figures mostly predate the latest round of hefty levies imposed by Trump.

Still, an upside surprise could be nasty, given it would be just a taste of the sharp price increases coming once tariffs fully kick in.

Key developments that could influence markets on Thursday:

- Tariff news

- U.S. inflation data (March)