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Nikkei Markets

Asia stocks gain on investor optimistic over US-China trade talks

Chinese companies pace gains on A300 index

HONG KONG (Nikkei Markets) -- Asian shares rose Monday amid increasing optimism over the ongoing trade talks between the U.S. and China.

The Nikkei Asia300 Index of companies outside Japan advanced 1% to 1,293.15.

The positive beginning to the week came after the U.S. and China on Friday agreed to continue their trade talks in an effort to reach a deal before a March 1 deadline. President Donald Trump has said he is flexible on the deadline if there is progress on the negotiations. Following high-level meetings between officials in Beijing last Thursday and Friday, the talks are scheduled to resume in Washington this week.

Trump said on Twitter that the meetings were "very productive" and he reportedly commented that the U.S. was closer than ever before to "having a real trade deal" with China. Chinese President Xi Jinping, too, took an optimistic tone. According to Xinhua News Agency, the Chinese leader said the latest round of meetings had achieved important progress.

"Trade talks are apparently going well with the U.S. and China agreeing "in principle" on main topics," ING Bank said in a note. It added that while the talks will resume this week, investors will likely take the optimism from last week to buy into risk assets.

On Friday, the S&P 500 Index had climbed 1.1% to its highest in one-and-a-half months. China and Hong Kong paced advance in Asian equities on Monday.

Risk appetite was further boosted by comments by a Fed official, which signaled that interest rates in U.S. were unlikely to rise this year. San Francisco Federal Reserve Bank President Mary Daly, in an interview with The Wall Street Journal, said that it "was a good time" for the Fed to be patient, considering that inflation is relatively muted.

On Monday, Chinese companies were the biggest contributors to the advance on the A300 Index. Hong Kong shares of China Southern Airlines rose 1.1% following a 14% increase in the passengers it carried in January. Air China climbed 2.3% after reporting an 11.3% increase, while China Eastern Airlines advanced 0.6% after a 17.2% rise in carried passengers.

Ping An Insurance Group advanced 1.8% following a 5.6% increase in the gross premium income for its life and health insurance businesses for January. Internet services heavyweight Tencent Holdings rose 1.8%, recovering from last week's 3.4% tumble.

DBS Group Holdings added 1.7% after Singapore's largest bank reported an 8% rise in fourth-quarter net profit amid another robust performance in consumer banking and wealth management. For the full year ended December 31, the net profit rose 28% to a record high.

Singapore Airlines climbed 2% after recording an 8.2% rise in the total number of passengers carried in January.

Taiwan Semiconductor Manufacturing advanced 1.3%. The world's largest contract chipmaker downgraded earnings forecasts late Friday owing to a defective chemical that disrupted an advanced production site. Separately, the company on Friday reported a 2.1% decline in January sales.

Hon Hai Precision Industry rose 1% after the Taiwanese electronics contract manufacturing company said that sales in January were up by 3.4% on-year. Quanta Computer slipped 1% after sales in January were little changed on a year-on-year basis.

Axiata Group rose 1.8% after the Malaysian mobile phone operator said it had accepted the voluntary conditional general offer for selling its entire 28.7% stake in Singapore's M1 for 1.65 billion ringgit ($405 million). Axiata said expects to record a profit of 126.5 million ringgit from the deal.

--Nimesh Vora

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