[HONG KONG] Asian markets fluctuated Wednesday as investors await the latest news on the US-China trade talks, though Australian stocks rose and the local dollar fell as weak economic growth data fuelled speculation about a rate cut.

With expectations that Washington and Beijing will eventually strike a tariffs deal already baked into equity prices, analysts say officials will need to provide some clarity on progress to give markets another step up.

But there are warnings that with optimism so high, there could be a lot of disappointment if the final deal does not live up to the hype, or the two sides fail to even reach an agreement.

The talk is that high-level negotiations are ongoing in order to pave the way for a signing ceremony between Donald Trump and Xi Jinping later this month.

"A mid-March meeting ... remains the expected next step, but if trade representatives are unable to agree on the final terms of implementation and enforcement measures, we could see the trade truce rally fade," said OANDA senior market analyst Edward Moya.

In morning trade Shanghai was up 0.7 per cent, building on Tuesday's rally that came on the back of China's decision to slash taxes and ramp up spending as leaders look to pep up the stuttering economy.

Mainland Chinese markets are up more than 20 per cent this year thanks to trade hopes and following a series of monetary easing measures to kickstart economic growth, which hit its slowest pace in three decades in 2018.

- Slow growth hits Aussie -

Hong Kong was up 0.5 per cent though Tokyo went into the break 0.6 per cent lower.

Sydney was 0.5 per cent higher after data showed Australia's economy virtually ground to a halt in October-December owing to tepid household spending and a weakening housing market.

The news has fuelled speculation the central bank will have to cut already record-low borrowing costs, sending the Australian dollar tumbling about 0.3 per cent against the greenback.

Elsewhere Singapore was off 0.1 per cent and Seoul fell 0.3 per cent but Manila piled on 0.7 per cent while Wellington and Taipei were also up.

On currency markets the pound struggled to recover from losses against the greenback after talks between British and EU negotiators failed to hammer out a revised Brexit deal that Prime Minister Theresa May can pass through parliament.

However, observers are optimistic an agreement can be reached and Britain will not leave the bloc without a deal.

"Any deal that is agreed has a higher chance of getting voted through than was the case in January when the deal was shot down by parliament," said James Hughes, chief market analyst at AxiTrader.

"Brexiteers fearful of Brexit being reversed could be more prone to back May, provided she can get a legal concession" on customs on the Northern Irish border.

AFP