Asia stocks rise on hopes global trade tensions ease

TOKYO (Reuters) — Asian stocks rose on Tuesday, supported by hopes Beijing and Washington would dial back trade hostilities, though comments from the US president about the yuan and Federal Reserve policy capped gains and weighed on the dollar.

Spreadbetters expected European stocks to open slightly lower, with Britain’s FTSE dipping 0.25 percent, Germany’s DAX shedding 0.05 percent and France’s CAC losing 0.1 percent.

In an interview with Reuters on Monday, President Donald Trump said that China was manipulating its currency to make up for having to pay tariffs imposed by Washington on some imports from China. This kept global trade conflict concerns alive and dented some of the market optimism ahead of upcoming US-China trade talks.

He also said he believed the euro was being manipulated.

MSCI’s broadest index of Asia-Pacific shares outside Japan climbed 0.6 percent.

Australian stocks lost one percent, South Korea’s KOSPI gained 0.95 percent and Japan’s Nikkei advanced 0.2 percent.

Chinese shares rose, with the Shanghai Composite Index climbing more than one percent, helped by bargain hunting of consumer and healthcare firms after their recent slump.

Wall Street’s major indexes rose on Monday on optimism over trade talks between the United States and China, though they fell from session highs after Trump’s comments.

Immediate focus was on the lower-level trade talks due to start this week between the US and China. Speculation that the talks might help ease trade tensions has shored up the broader equity markets over the past few sessions.

Market optimism was tested, however, after Trump said he did not “anticipate much” from the discussions.

“Given the little progress made on the US-China negotiations in the past six months, investors’ expectations are still low,” wrote Tai Hui, global market strategist at J.P. Morgan Asset Management.

“Ongoing negotiation is good news, and that’s what the market is riding on at this stage, but a sustainable agreement to end this tension still seems unlikely at this point.”

In currency markets, the dollar came under pressure after Trump reiterated his displeasure at the Fed’s rate hikes, saying the central bank should do more to help him boost the US economy.