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Nikkei Markets

Asian stocks edge lower, dragged down by Chinese companies

Mainland lenders, carmakers, and airlines pace losses on A300 Index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan declined Tuesday amid a pullback in Chinese companies.

The Nikkei Asia300 Index of companies outside Japan fell 0.5% to 1,312.45. Chinese lenders, carmakers, and airlines paced losses on the gauge. Hong Kong-shares of Bank of China slid 1.2%, China Eastern Airlines declined 2.6%, and Great Wall Motor closed 0.9% lower. Heavyweight Tencent Holdings lost 1.8%. An index of Chinese companies listed in Hong Kong, the Hang Seng China Enterprises Index, dropped 1.9%, the worst decline in more than six weeks. The gauge had closed at near seven-week highs on Monday.

Focus of investors remained on the upcoming meeting between U.S. President Donald Trump and Chinese President Xi Jinping at the sidelines of the G20 gathering in Japan. According to Reuters, China's Ministry of Commerce said in a statement posted its website on Tuesday that top trade officials of both the countries held a telephone conversation. During the call, the officials exchanged opinions on trade in accordance with the instructions of the two countries' heads of state, the report added.

Trump had said last week that officials of the two nations will hold talks ahead of the summit. Probability of a deal being reached increased following constructive remarks from both the sides in recent days.

Jingyi Pan, a market strategist at IG Asia, said that while relief in the form of trade-talk hopes and Federal Reserve's accommodative stance have enabled Asian equities to recoup most of last month's losses, any disappointment at the G20 will "puncture prices." Investors were likely to be cautious ahead of the meeting and will be "reluctant to err on either side," she added.

Meanwhile, expectations of the Fed easing interest rates next month prompted the 10-year Treasury yield to fall to near 2%. The U.S. Dollar continued to struggle against its major peers.

In other movers on the A300 on Tuesday, energy related shares struggled on back of a pullback in crude oil prices. U.S. imposed new sanctions on Iran, targeting the country's supreme leader and other main officials. PetroChina declined 1.1%, CNOOC lost 1.5%, and Singapore's Keppel Corp. fell 0.6%.

Index heavyweights Taiwan Semiconductor Manufacturing slipped 1% while Samsung Electronics climbed 0.2%.

Thailand equities advanced, a day ahead of the Bank of Thailand's monetary policy review. The BoT is expected to keep the one-day repurchase rate at 1.75%, according to all but one of 21 economists polled by Bloomberg. The country's SET Index closed 0.3% higher.

--Nimesh Vora

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