Hong Kong (AFP) - Asian investors fought Friday to grind out gains at the end of a painful week for markets as they welcomed signs that US lawmakers will avert a government shutdown, but remained fearful over Donald Trump’s trade war.

Equities have been pummelled in recent weeks and gold pushed to a record high, by concerns about a US recession as the president hammers trading partners with swingeing tariffs while billionaire ally Elon Musk slashes federal jobs at home.

In the latest salvo, Trump threatened to impose 200 percent tariffs on wine, champagne and other alcoholic beverages from European Union countries in retaliation against the bloc’s planned levies on American-made whiskey.

The European measures – including a 50 percent tariff on American whiskey – were in response to the White House’s levies on steel and aluminium imports.

“If this Tariff is not removed immediately, the U.S. will shortly place a 200% Tariff on all WINES, CHAMPAGNES, & ALCOHOLIC PRODUCTS COMING OUT OF FRANCE AND OTHER E.U. REPRESENTED COUNTRIES,” Trump posted on his Truth Social platform.

He also said he would not row back on the metals duties, nor plans for sweeping reciprocal tariffs on global partners that are due to kick in as soon as April 2.

Observers have warned that markets are being wracked by uncertainty amid fears the increasing trade war between major global economies could reignite inflation, with many investors worrying about a possible recession in the United States.

Wall Street has been hammered, with the S&P 500 slipping into a correction Thursday, having fallen more than 10 percent from its recent peak – a record high touched just last month.

Gold, a haven in times of turmoil, hit a record of $2,993.91 on Friday owing to a rush into safety.

However, Asian markets enjoyed a broadly positive day with hopes th US Congress will pass a bill to avert a painful government shutdown.

With just hours until a deadline to push a Republican spending bill through, Senate Democratic leader Chuck Schumer dropped his threat to block it.

The package would keep the lights on through September, but Democrats have come under pressure from their grassroots to defy the plan, which they say is full of harmful spending cuts.

Schumer claimed Trump and Musk – who runs the Department of Government Efficiency (DOGE) that has gutted various key agencies – were hoping for the government to grind to a halt.

“A shutdown would give Donald Trump and Elon Musk carte blanche to destroy vital government services at a significantly faster rate than they can right now… with nobody left at the agencies to check them,” he warned.

Hong Kong rose more than two percent, recouping some of the losses suffered over the week, while Shanghai jumped 1.8 percent on news that Chinese officials would hold a news conference Monday on measures to boost consumption.

Tokyo, Sydney, Wellington, Taipei, Manila and Bangkok also advanced. There were losses in Singapore, Seoul and Jakarta.

London ticked up at the open but Paris and Frankfurt edged down.

Chris Beauchamp, chief market analyst at IG, said a US government shutdown could be costly.

“The 2018-2019 shutdown… resulted in an estimated $11 billion loss to the US economy, with $3 billion considered permanent,” he wrote in a note.

“Current market participants are clearly factoring in similar potential damage if lawmakers fail to reach an agreement.

“A government shutdown, combined with existing trade tensions and tariffs, could exacerbate market volatility. Investors are already concerned about the economic impact of ongoing tariffs, which have contributed to declines in major stock indices in recent sessions.”

Dealers were also watching developments in Europe after Russian President Vladimir Putin said he had “serious questions” about Washington’s plan for a 30-day ceasefire in Ukraine. However, he said he was ready to discuss it with his American counterpart.

In company news, major conglomerate CK Hutchison Holdings – owned by tycoon Li Ka-shing – tumbled in Hong Kong after Chinese officials in the city reposted an attack on the firm over its sale of a controlling stake in Panama ports under pressure from Trump.

It had surged as much as 25 percent after the sale last week.

- Key figures around 0815 GMT -

Tokyo - Nikkei 225: UP 0.7 percent at 37,053.10 (close)

Hong Kong - Hang Seng Index: UP 2.1 percent at 23,959.98 (close)

Shanghai - Composite: UP 1.8 percent at 3,419.56 (close)

London - FTSE 100: UP 0.1 percent at 8,550.09

Euro/dollar: DOWN at $1.0838 from $1.0849 on Thursday

Pound/dollar: DOWN at $1.2923 from $1.2948

Dollar/yen: UP at 148.83 yen from 147.75 yen

Euro/pound: UP at 83.87 pence from 83.75 pence

West Texas Intermediate: UP 1.1 percent at $67.31 per barrel

Brent North Sea Crude: UP 1.0 percent at $70.56 per barrel

New York - Dow: DOWN 1.3 percent at 40,813.57 (close)