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Nikkei Markets

Asian stocks rise on trade deal hopes, China central bank move

Air China rises after October data, China Eastern slips

HONG KONG (Nikkei Markets) -- Asian stocks rose Monday, helped by indications of progress in Sino-American trade talks. Chinese equities advanced after the nation's central bank lowered its interbank lending rate.

The Nikkei Asia300 Index rose 0.8% to close at 1,325.17.

All the three major U.S. equity indexes had closed at record highs on Friday amid optimism over trade relations between the U.S and China. White House economic adviser Larry Kudlow last week indicated an agreement was close to being reached. China's Commerce Ministry said Vice Premier Liu He and U.S. Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer had "constructive" talks over telephone on Saturday.

Markets "appear to be baking in a swift and meaningful Phase-One agreement," Stephen Innes, the chief market strategist at AxiTrader, wrote in a note. "The negative Hong Kong sentiment has not led to any significant contagion," he added, highlighting that the Hang Seng Index rose after a weekend of chaos in the city.

The unrest in Hong Kong that gathered pace last week showed no signs of abating. Hong Kong schools were suspended on Monday after being closed on Thursday and Friday. Demonstrations in recent days have turned increasingly violent following the death of a protester and the shooting of an activist.

Local property developers, particularly sensitive to the political unrest in the city due to the resulting pressure on real estate prices, rebounded on Monday. Sun Hung Kai Properties climbed 1.7% following an 11% plunge last week. New World Development, which shed 9.4% last week, added 1.5%.

Meanwhile, the Shanghai Composite Index rose 0.6% after China's central bank on Monday said it is lowering the seven-day reverse repurchase rate to 2.50% from 2.55%.

The reverse repo rate cut "was a bit of a surprise," Innes wrote. "It seems the People's Bank of China is acknowledging the deterioration in the economy."

Mainland lenders China Construction Bank and Industrial & Commercial Bank of China climbed 1.6% and 2%, respectively.

Electric carmaker BYD edged 0.1% higher in Hong Kong. The company said it will provide the Colombian capital of Bogota with a fleet of 379 pure electric buses, in a deal awarded by TransMilenio SA mass transport authority. This fleet will begin operations from September 2020.

Air China rose 1% after reporting a 1.2% year-over-year increase in the number of passengers carried in October. China Eastern Airlines slipped 0.7% even as its passengers carried last month rose 4.3% from a year earlier.

--Suzannah Benjamin

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