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Asian markets mixed as China, US hold talks but prepare tariffs

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[HONG KONG] Asian markets were mixed Thursday as investors take a breather after the recent run-up, while preparing for China and the US to impose tit-for-tat sanctions just as the two sides hold talks on their long-running trade dispute.

The dollar enjoyed some buying again after minutes from the Federal Reserve's most recent policy meeting indicated it will hike borrowing costs next month. The greenback had taken a hit this week from Donald Trump's comments criticising the central bank's rate increases.

Officials from the world's top economies are holding their first talks since June aimed at easing a row that has dragged on equities for months.

However, observers are cautious about the sort of progress they will make initially while threatened levies on billions of dollars worth of goods are due to be put into place by 0401 GMT.

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In early trade Hong Kong was down 0.7 per cent after a four-day winning streak but Shanghai was up 0.1 per cent and Tokyo went into the break 0.2 per cent higher.

Sydney fell 0.2 per cent - and the local dollar shed 0.8 per cent - as Australia's Prime Minister Malcolm Turnbull fights for his political life following a leadership challenge.

The S&P/ASX 200 was also being dragged by a near five per cent plunge in Qantas as a jump in the airline's profits was offset by its worries about rising fuel costs.

Seoul slipped 0.1 per cent but Singapore surged 1.3 per cent, after a one-day holiday, and Taipei added 0.2 per cent.

Investors are keeping tabs on developments in Washington after Trump's former personal adviser admitted a series of charges including illegal use of election funds, while his ex-campaign manager was convicted on several counts such as bank and tax fraud.

On currency markets the US dollar sprang back to life against the yen, pound and euro after this week's travails, with the Fed signalling in the minutes it is ready to lift rates "soon" as the economy continues to improve.

However, it did warn that an escalation of the China dispute could hit growth, with all members of the policy committee pointing to "ongoing trade disagreements and proposed trade measures as an important source of uncertainty and risks".

In addition, most said "an escalation in international trade disputes was a potentially consequential downside risk for real activity".

Attention now turns to this week's annual central bankers' symposium at Jackson Hole in Wyoming, which will be followed in light of Mr Trump's remarks on the Fed's hikes and its concern about the trade row.

AFP