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Asia: Markets rise as dealers nervously await start of trade talks

Asian markets rose on Thursday but investors moved cautiously as they sifted through conflicting reports about the outlook for upcoming China-US trade talks.

[HONG KONG] Asian markets rose on Thursday but investors moved cautiously as they sifted through conflicting reports about the outlook for upcoming China-US trade talks.

Global investors have been broadly upbeat in recent weeks that the meeting in Washington between top-level representatives would see at least some progress.

But with the much-anticipated gathering due to start within hours, Hong Kong's South China Morning Post reported pre-meeting discussions had not made any progress on key areas such as forced technology transfers, and would be cut in half to just one day.

That came after Wall Street's three main indexes had ended with healthy gains on reports that a pared-down deal was still possible, with Beijing boosting agricultural purchases and the US delaying the imposition of new tariffs next week.

Tensions were already showing this week after the US unveiled restrictions on 28 Chinese entities over human rights violations in Xinjiang province and imposed visa restrictions on some officials, while a report said the White House was considering curtailing US investment in the country.

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For its part, sources were reported to have said China had narrowed the issues it was willing to discuss as it felt in a stronger position owing to Donald Trump facing an impeachment inquiry at home and a weakening economy.

The SCMP report "reverses the trade optimism that was dominating overnight flow as investors were hoping that at minimum, some type of a deal could be forged", said Stephen Innes, Asia-Pacific market strategist at AxiTrader.


"So instead of debating how encompassing the deal might be, investors are now back to plucking petals from a flower guessing if there will be a deal at all."

On regional markets Shanghai and Hong Kong each rose 0.4 per cent while Tokyo went into the break 0.5 per cent higher. Sydney and Singapore each added 0.1 per cent, with Manila and Jakarta also higher.

Wellington was flat and Seoul sank 0.8 per cent.

In foreign exchanges, the dollar was lower against most other currencies after minutes from the Federal Reserve's September policy meeting showed it was growing concerned about the impact of Trump's trade war.

The central bank is expected to cut interest rates for a third time when the board meets again later this month.

The minutes "revealed greater concerns over downside risk from slowing global growth and trade tensions with subdued inflation also seen as a reason to cut", said Rodrigo Catril at National Australia Bank.

But he pointed out that "a few officials saw the need to push back against market Fed rate cut expectations".

Oil prices extended Wednesday's losses following data showing a bigger-than-forecast pick-up in US inventories that reinforced worries about the impact on demand from a global slowdown and trade frictions.

The data reversed a rally of more than one per cent in the commodity that came after Turkey launched an offensive against Kurdish militants in northern Syria.


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