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Asia: Markets mostly up as dealers take China tariffs in stride


[HONG KONG] Asian investors on Thursday largely brushed off China's tit-for-tat response to Donald Trump's latest tariff threats, with most markets rising, but concerns about the impact of an all-out trade war are keeping optimism in check.

Beijing said on Wednesday it would impose 25 per cent tariffs on US$16 billion of US goods from August 23, retaliating in kind to a warning from US officials the day before and escalating a crisis that pits the world's top two economies against each other.

While the row has sent global markets into convulsions this year, the latest development had been widely expected, with Wall Street ending mixed.

In early trade Hong Kong jumped 0.8 per cent higher, extending a rally into a fourth day, while Shanghai surged 1.5 per cent following healthy Chinese inflation data.

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Sydney added 0.5 per cent and Wellington rose 0.8 per cent, while Jakarta gained 0.1 per cent.

However, Tokyo dropped 0.3 per cent on a stronger yen and Seoul eased 0.1 per cent. Taipei and Manila were also slightly down.

Energy firms dived in line with a sharp sell-off in oil, which followed a report showing US stockpiles fell less that expected, while investors are also fretting over the effects of a China-US trade war on demand.

Both main contracts plunged more than three per cent on Wednesday, with analysts saying figures pointing to a drop in Chinese imports from the US were also detrimental. WTI and Brent were largely flat Thursday.

"Oil fell out of bed last night as worries over Chinese demand surfaced after the trade data yesterday and in the wake of China's hitting back in the tariff war targeting energy products," said Greg McKenna, chief markets strategist at AxiTrader.

On currency markets the ruble extended Wednesday's losses and is now down about three percent against the dollar after Washington imposed fresh sanctions over Russia's involvement in the attempted killing of a former spy in Britain.

And the pound also remains rooted near one-year lows on fears Britain will leave the European Union next year with no deal to trade with the bloc, with the country's trade secretary and central bank boss recently warning the chances of such a scenario are increasing.

"The market is clearly getting more nervous over the possibility of a no-deal Brexit, which would be a messy outcome for the UK economy," said Rodrigo Catril, senior foreign exchange strategist at National Australia Bank.