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South-east Asia: Most stocks rise on hopes China will push ahead with US trade talks

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[BENGALURU] South-east Asian stocks recovered on Tuesday on expectations that China will still go ahead with trade talks after the US prepared to impose tariffs on more Chinese goods from Friday, while some economies in the region awaited rate-cut decisions.

Asian shares remained fragile after US President Donald Trump's latest threat to raise tariffs on more Chinese goods shocked financial markets and fuelled worries that trade talks may be derailed.

However, fears of an escalation in trade war were somewhat calmed by a statement from China's foreign ministry that a delegation was still preparing to travel to the United States for talks.

"The markets are probably relieved that China has not reacted with threats of retaliatory tariffs, but has chosen to send delegates to the US to continue negotiations instead. However, there is the possibility that talks will be extended again as China holds its ground on certain issues," said Liu Jinshu, director of research at NRA Capital.

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The Philippine index gained about 0.7 per cent, as a possible rate cut became more evident after data showed the nation's annual inflation in April had slowed. "This inflation print paves the way for the (Philippine central bank) BSP to cut the Overnight Reverse Repurchase Rate (RRP) by 25 basis points (bps) at its monetary policy meeting on Thursday," ANZ Research said in a note to clients.

Indonesian shares rose 0.68 per cent with telecommunications stocks leading gains. Some analysts have argued Indonesia's central bank has room to unwind rate hikes to support economic growth this year, after data on Monday showed that the country's economy expanded more slowly than expected in the first quarter, as investment dropped.

Malaysian stocks rose 0.5 per cent, their biggest intraday percentage gain since April 24, with telecommunication service providers Axiata Group and Digi.com among best performers. Malaysia's central bank is expected to cut its policy rate by 25 bps later in the day as the country faces subdued inflation.

Singapore stocks, which are most exposed to the US-China trade conflict, rose 0.3 per cent, after shedding more than 3 per cent on Monday. South-east Asia's largest lender DBS Group rose as much as 1.3 per cent, while conglomerate Keppel Corp gained 1.5 per cent.

Thai stocks traded 0.5 per cent lower, led down by energy and healthcare shares.

REUTERS