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Nikkei Markets

Asian stocks advance as US, China agree for initial trade pact

Taiwan Semiconductor, Samsung Electronics among A300 gainers

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan advanced Monday after the U.S and China took initial steps in ending their long-running trade conflict.

The Nikkei Asia300 Index rose 0.8% to 1,278.28. Index heavyweight Taiwan Semiconductor Manufacturing climbed 2.8% after it reported July-September sales that beat estimates. Another index major Samsung Electronics added 1.7%.

Asian equities were buoyed by the tentative trade agreement that suspended the planned U.S. tariff increase on $250 billion of Chinese products in return for Beijing ramping up purchases of American agricultural goods. The initial agreement reached on Friday is likely to be signed by President Donald Trump and his counterpart Xi Jinping next month. The pact is expected to pave way for a more comprehensive deal.

Chinese companies were among the major winners on the A300 gauge. An index of Chinese companies listed in Hong Kong climbed 0.5% to reach a near one-month high.

Hong Kong's Hang Seng Index added 0.8% and the Shanghai Composite Index rose 1.2%.

"Near-term upside of 5% is possible for MSCI China and 4% for the Hang Seng thanks to Friday's progress on U.S.-China trade talks, based on historical market reactions," Morgan Stanley said in a note. "Other uncertainties in and outside the trade sphere continue to weigh on the longer-term outlook."

China Construction Bank added 1.5%, leading mainland banks higher. Great Wall Motor added 1.5% after reporting a 15.3% on-year increase in September sales.

Dongfeng Motor Group and Guangzhou Automobile Group rose 1.1% and 0.6%, respectively, amid the broad market rally. Both the carmakers reported a year-on-year decline in sales volume.

China Mobile fell 0.3%. The mobile phone services provider said Friday that Li Yue resigned from his role of chief executive officer, effective immediately.

Infosys, the second-largest Indian software exporter, dropped 3.7% following a 2.2% on-year fall in April-September net profit.

Hyundai Motor fell 3.2% and Kia Motors dropped 2.7%. Hyundai Motor and affiliate Kia made a provision of 600 billion Korean won ($506 million) and 300 billion Korean won to settle U.S. lawsuits over engine fires.

Meanwhile, Singapore's STI Index closed 0.3% higher. The city state's central bank loosened its monetary policy on Monday by reducing the slope of its policy band "slightly," to support growth. Singapore targets the exchange rate to set monetary policy instead of interest rates.

Data released on Monday showed that Singapore's economy grew by just 0.1% on-year during the third quarter, matching the pace set in the second quarter.

--Nimesh Vora

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