China shares strengthen on positive trade news

China stocks ended higher on Tuesday in very thin trade as Beijing confirmed that it is still in trade talks with Washington, and as investors looked to market support from government policies aimed at countering slowing growth.

At the close, the Shanghai Composite index was up 0.37 percent at 2,594.09 points. The bluechip CSI300 index was up 0.48 percent.

The smaller Shenzhen index closed 0.79 percent higher at 7,685.40 points and the start-up board ChiNext Composite index was up by 0.85 percent.

China and the US discussed the roadmap for the next stage of their trade talks on Tuesday, during a telephone call between Chinese Vice Premier Liu He and US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

In a note, analysts at Guodu Securities highlighted the continued weakness in global risk appetite following the arrest of Huawei CFO Meng Wanzhou, as an inverted US Treasury yield curve points to a risk of recession, and as the risk of a no-deal Brexit increases. But analysts said the domestic market was showing some “positive changes” as government relief policies are implemented, reducing the risks posed by pledged shares, and as measures to open up domestic markets, such as the Shanghai-London Stock Connect, attract long-term capital to the market.

The largest percentage gainers on the main Shanghai Composite index were Ningxia Xinri Hengli Steel Wire Rope Co, up 10.08 percent.