By Lewis Krauskopf

NEW YORK (Reuters) – Hopes for rekindled trade talks between the United States and China supported stock markets on Tuesday, while the British pound firmed as the UK Supreme Court ruled Prime Minister Boris Johnson’s decision to suspend parliament was unlawful.

Wall Street’s benchmark S&P 500 index rose but pulled back from sharper gains after disappointing data on consumer confidence that also put pressure on the U.S. dollar.

U.S. Treasury Secretary Steven Mnuchin said on Monday that he and U.S. Trade Representative Robert Lighthizer would meet with Chinese Vice Premier Liu He for trade talks in two weeks, after waning optimism on trade had hit the stock market on Friday.

“The tone around trade is really setting the table for markets today, both domestically and globally,” said Art Hogan, chief market strategist at National Securities in New York.

A report showed that U.S. consumer confidence fell by the most in nine months in September, far more than expected, as Americans’ economic outlooks darkened in the face of the U.S.-China trade war.

Investors have pointed generally to U.S. consumer strength as a reason to be optimistic about the economy despite questions otherwise about a potential downturn.

“On balance, the economic data today in the United States was mildly disappointing,” Hogan said.

The Dow Jones Industrial Average rose 72.58 points, or 0.27%, to 27,022.57, the S&P 500 gained 8.51 points, or 0.28%, to 3,000.29 and the Nasdaq Composite dropped 1.60 points, or 0.02%, to 8,110.86.

The pan-European STOXX 600 index rose 0.15% and MSCI’s gauge of stocks across the globe gained 0.19%.

German business morale rose in September for the first time in six months but Europe’s largest economy was still likely slipping into recession, the Ifo economic institute said.

Sterling gained after the court ruling, but uncertainty over a possible general election and the eventual outcome of Britain’s impending exit from the European Union capped its rise.

Some investors bet that the court’s decision would reduce the probability of Britain leaving the European Union without a transaction agreement on Oct. 31.

The pound was up 0.36% against the dollar.

The dollar index, which measures the greenback against a basket of six major currencies, fell 0.08%, with the euro up 0.07% to $1.0999.

Benchmark 10-year U.S. notes last rose 11/32 in price to yield 1.6714%, from 1.708% late on Monday.

Oil prices fell after weak manufacturing data from Europe and Japan focused market attention on a gloomy outlook for demand and as Saudi Arabia managed to restore oil output faster than anticipated following recent attacks on its facilities.

U.S. crude fell 1.76% to $57.61 per barrel and Brent was last at $62.47, down 1.98% on the day.

(Additional reporting by Marc Jones in London; Editing by Bernadette Baum)