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GLOBAL MARKETS-Confirmation of U.S.-China trade talks buoys shares, investor spirits

Published 05/09/2019, 12:45 pm
Updated 06/09/2019, 02:45 pm
© Reuters.  GLOBAL MARKETS-Confirmation of U.S.-China trade talks buoys shares, investor spirits
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* Investors hope for resolution to U.S.-China trade dispute

* Brexit vote boosts global shares

* HK tension eases for now, but concerns remain

* Oil pulls back in Asia after strong rally overnight

By Stanley White

TOKYO, Sept 5 (Reuters) - Asian shares extended gains on Thursday and U.S. stock futures jumped after China said it will hold trade talks with the United States in early October, raising hopes they can de-escalate their trade war before it inflicts further damage on the global economy.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was up 0.8%, while the Shanghai composite index .SSEC surged 1.8%. Japan's Nikkei .N225 added 2.4%.

U.S. stock futures ESc1 reversed early losses and rose 1%.

The Chinese yuan jumped versus the dollar in offshore trade, while safe-have assets such as gold and the yen fell.

China's confirmation of trade talks added to upbeat geopolitical news overnight. A parliamentary vote in Britain put the brakes on the nation's no-deal exit from the European Union, Hong Kong withdrew a contentious extradition bill that sparked recent protests and political turmoil in Italy appeared to be easing.

China's Commerce Ministry said its trade team will consult with their U.S. counterparts in mid-September in preparation for negotiations in early October, hinting at progress in reducing trade friction. sides had agreed to take actual actions to create favourable conditions, the ministry added, without giving more details.

"Since yesterday, there has been limited downside in markets because of what happened in Hong Kong, but now the U.S.-China talks are the story," said Masayuki Kichikawa, chief macro strategist at Sumitomo Mitsui Asset Management Co in Tokyo.

"It's the same about Brexit, which means less downside risk."

Hong Kong .HSI shares erased early losses to rise 0.5%. They had jumped in afternoon trade on Wednesday after leader Carrie Lam said she was withdrawing an extradition bill that had triggered months of often violent protests in the Asian financial hub. currency markets, sterling held onto gains against the dollar in Asia after rallying the most in more than five months on Wednesday after lawmakers voted to prevent Prime Minister Boris Johnson taking Britain out of the European Union without a deal on Oct. 31. more than three years since the United Kingdom voted narrowly to leave the EU, the outcome of Brexit is still unclear, with possible outcomes ranging from a crash out of the EU to abandoning the whole endeavour.

Against the offshore yuan CNH=D3 , the dollar fell 0.2% to 7.1324 yuan.

U.S. Treasury yields extended gains in Asia and the yield curve steepened, both signs that investors were willing to take on riskier assets.

The 10-year yield US10YT=RR rose to 1.4758%, while two-year yields US2YT=RR rose to 1.4519%.

The spread between two- and 10-year Treasury yields US2US10=TWEB , the most commonly used measure of the yield curve, rose to its highest since Aug. 21 on Wednesday but narrowed slightly in Asian trade.

The curve inverted on Aug. 14 for the first time since 2007 when long-term yields traded below short-term yields, which is a widely accepted indicator of coming recession.

U.S. West Texas Intermediate crude CLc1 also reversed losses to trade up 0.2%.

(Editing by Sam Holmes & Kim Coghill)

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