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Nikkei Markets

Asian stocks edge lower, dragged down by Chinese companies

Samsung Electronics, Tencent also damp A300 index

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

The Nikkei Asia300 index slid 0.3% to 1,379.71. Samsung Electronics fell 0.9% and Taiwan Semiconductor Manufacturing dropped 0.6%, trimming their monthly advance to 9.3% and 8.9%, respectively. Tencent Holdings edged 0.3% lower and an index of Chinese companies listed in Hong Kong dropped 0.2%.

The losses on Asian equities came after a good run-up this month amid optimism over the U.S.-China trade relationship. The benchmark equity gauge of Hong Kong is on course for its best monthly performance in six months and the Hang Seng China Enterprises is headed for the biggest advance in 11 months. The A300 gauge was up 6.5% in December prior to Tuesday's pullback.

The U.S. and China earlier this month reached an interim agreement that could potentially diffuse the long-running trade conflict. The agreement involved China increasing purchases of U.S. goods in return for Washington cancelling a planned increase of tariffs on more Chinese goods and decreasing levies on more than $100 billion of Chinese shipments.

Asian equities this month were further benefitted from an improving U.S. economic outlook, reflected in rising Treasury yields and a steepening yield curve. The closely watched spread between the 10-year U.S. yield and the two-year yield is now at 28 basis points. It had earlier this year turned negative, signaling a possible recession.

In other movers on the A300, Chinese telecom equipment maker ZTE added 1.1%. Goldman Sachs said China will reportedly build six million 5G base stations over the next seven years, which would have positive implications for both 5G equipment and smartphone makers in China including ZTE.

PetroVietnam Gas rose 0.5%. The Vietnamese company reportedly said Tuesday that its current year net profit will likely be 11.17 trillion Vietnamese dong ($482 million), down 4.6% from a year ago.

--Nimesh Vora

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