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Nikkei Markets

Asian equities fall as fresh concerns surface over US-China trade talks

Chinese companies drag A300 index down

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan fell Monday, led by Chinese companies, amid fresh concerns over the US-China trade talks. The Nikkei Asia300 Index lost 0.5% to close at 1,268.51. Chinese financial firms, property companies, and infrastructure-related firms were among the biggest losers on the gauge. Industrial and Commercial Bank of China declined 0.4%, China Vanke dropped 2%, and China Communications Construction fell 3.7%. An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, slid 0.8%. The Shanghai Composite closed 1% lower and the onshore Chinese yuan dropped 0.5% to 7.1258 to a dollar. The losses on Asian equities came amid mixed developments in the U.S.-China trade front. Deputy level talks between officials of the two countries concluded Friday, following which the U.S. Trade Representative's office reportedly said that the discussions were positive and the U.S. looked forward to welcoming a delegation from China for principal-level meetings in October.

Those constructive remarks, however, were undermined by the cancelation of a planned visit to U.S. farms by the Chinese delegation and remarks by President Donald Trump that he did not want to make a partial trade deal. U.S. equities closed lower on Friday.

Trump said that he did not need to make a trade deal with China before next year's U.S. presidential elections and stressed that he is looking for a complete and not a partial deal with Beijing. Earlier last week, there were reports that the U.S. was considering an interim trade deal and Trump himself said that he could have a look at one.

Meanwhile, on the cancellation of the farm visit by the Chinese delegation, a vice-minister at the Ministry of Agriculture and Rural Affairs said that the change in the plan had nothing to do with the trade negotiations, according to a report by China Business News, carried by South China Morning Post.

Michael McCarthy, the chief market strategist at CMC Markets and Stockbroking, said that presently trade talks were at "front and center" and that the latest updates come ahead of data that will indicate the direct impact of the trade conflict on major economies.

In other movers on the A300 on Monday, Hong Kong light-rail operator MTR fell 1% following reports of vandalism that affected its station facilities and services over the weekend. The protests in the city have spilled over to a 16th consecutive week in the absence of signs that Hong Kong policymakers will accept activists' demands, including one for implementation of universal suffrage.

Meanwhile, Indian equities once again outperformed. The nation's benchmark index, the BSE Sensex, closed 2.8% higher, adding to Friday's 5.3% surge after the country's finance minister announced a cut in the corporate tax rate. Larsen & Toubro jumped 8.1%, ITC rallied 6.9%, and Asian Paints ended 7.9% higher.

--Nimesh Vora

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