The United States and China have agreed to the first phase of a trade deal covering agricultural purchases, currency and some aspects of intellectual property protections, and averting a threatened tariff hike, but President Donald Trump said more needed to be negotiated.

The preliminary, partial deal was the biggest step toward resolving a 15-month tariff war between the world's two largest economies that has roiled financial markets, disrupted manufacturing and has slowed global growth.

Trump told reporters at the White House that the two sides are very close to ending the trade war and it will take up to five weeks to get the deal written. He spoke after talks with Chinese Vice Premier Liu He.

US Treasury Secretary Steven Mnuchin told reporters Trump had agreed not to proceed with a hike in tariffs to 30 per cent from 25 per cent on about $US250 billion in Chinese goods that was supposed to have gone into effect on Tuesday.

But Trade Representative Robert Lighthizer said Trump had not made a decision about tariffs that were subject to go into effect in December.

Major US stock indexes, which were trading sharply higher on hopes of some sort of a deal, pared some of the gains after the announcement, with the S&P 500 index up about 1.4 per cent.

Indexes cut their gains late in the session as the deal was announced amid worries over potential glitches in the agreement, strategists said.

The market had risen sharply earlier in the day due to optimism for an agreement.

"Anything that was less than a comprehensive agreement was likely to see some degree of market sell off," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"The timing had a lot to do with the volatility. There were 15 minutes to go in the trading day on a Friday... after the Dow had risen 700 points in the last two days," he said.

Top-level discussions between the two countries concluded their second day on Friday.

- with Caroline Valetkevitch

Reuters