HONG KONG (Nikkei Markets) -- Asian shares outside of Japan extended gains on Tuesday amid increasing bets that the U.S. and China are close to reaching a phase-one trade deal.
The Nikkei Asia300 index of companies outside Japan rose 0.8% to 1,347.57.
Heavyweight Tencent Holdings climbed 1.6% and Samsung Electronics added 0.8%. The appetite for Asian equities was boosted by a Financial Times report that U.S. officials were debating whether to remove existing tariffs on Chinese goods to reach a partial trade deal. Another report by The Wall Street Journal said that officials from both the countries were "actively" considering rolling back some tariffs.
The reports further reinforced expectations that the two countries are making headway in resolving their long-running trade dispute. U.S. officials and China's Commerce Ministry had made positive comments in recent days regarding the progress of the negotiations. Bloomberg reported that China was reviewing locations in the U.S. where President Xi Jinping and President Donald Trump could meet to sign the phase-one deal.
Amid the trade optimism, the Shanghai Composite closed 0.5% higher and an index of Chinese companies in Hong Kong added 0.6%. Meanwhile, the People's Bank of China cut the cost of lending 1-year funds by 5 basis points to 3.25% on Tuesday. It was reportedly the first time since 2016 that the Chinese central bank had lowered the rate on the medium-term lending facility.
Stephen Innes, the chief Asia strategist at AxiTrader, said that in the days ahead, the key question for investors will be how much of a "fortuitous conclusion" of the phase-one trade deal is already in the price.
Among movers on the A300 on Tuesday, China Vanke slipped 0.3%. The property developer's accumulated January-to-October sales reportedly rose 7% from a year earlier. Its peer China Evergrande Group climbed 0.3% after the mainland property developer reported a 70% year-over-year jump in October contracted sales.
Oversea-Chinese Banking Corp. edged 0.1% higher. The Singaporean lender reported a 6% fall in third-quarter net profit.
Singapore's CapitaLand, Southeast Asia's largest property developer, rose 1.1% despite posting a 7.8% on-year decline in net profit in the third quarter.
Meanwhile, Malaysia's central bank on Tuesday maintained the key policy rate at 3%. Eight out of 11 economists polled by Reuters had expected the central bank to keep the rates unchanged and the remaining had forecast a quarter percentage points reduction.