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Nikkei Markets

Asian stocks surge as Trump reportedly approves trade deal

Chinese companies post biggest gains on A300 index

HONG KONG (Nikkei Markets) -- Asian shares outside of Japan surged Friday following reports that U.S. President Donald Trump signed an agreement that averts new tariffs on China.

The Nikkei Asia300 index jumped 2.3% to 1,365.57.

Asian equities were buoyed by reports that the U.S. and China agreed upon terms of an interim trade deal, which Trump approved. The deal presented to Trump included a commitment by China to buy more U.S. agricultural products in exchange for averting new tariffs scheduled to take effect this Sunday, Bloomberg reported. The Wall Street Journal reported that the deal involved roll back of existing levies on Chinese goods.

The terms of the trade deal and the legal text had yet to be agreed upon, the reports said. No formal announcement was made by the White House.

"After months of back and forth and scaling back of the scope of trade negotiations, a limited U.S.-China trade deal arguably reduces the global market uncertainty for at least a few months," Taimur Baig, the Chief Economist of G3 & Asia at DBS, wrote in a note. "Key issues remain unresolved, however, leaving considerable risk on the table for next year."

Further helping Asian equities were the results of the U.K. election, which eased the uncertainty surrounding Britain's withdrawal from the European Union. Boris Johnson-led Conservative Party won a comfortable majority in the lower house of the U.K. Parliament. The victory will allow him to take Britain out of the European Union next month.

Chinese companies were the biggest winners on the A300 gauge on Friday. Air China, up 5.9%, led airlines higher after the trade optimism lifted the yuan by the most in a year against the dollar. On account of the high dollar-debt exposure, Chinese airlines are sensitive to moves on the yuan.

China Life Insurance added 3.6% after reporting a 5.7% increase in premium income for the January-to-November period.

Chinese pork producer WH Group advanced 2.3%. Its unit Smithfield Foods wants to export around 40,000 metric tons of chilled pork to Hong Kong amid a supply squeeze that has boosted prices in the former British colony, a company executive at Smithfield said Thursday.

Hong Kong listed Macau casino operators Galaxy Entertainment Group and Sands China rose at least 5.3% each. Chinese President Xi Jinping is scheduled to visit Macao next week to announce new policies aimed at diversifying the city's gaming-dependent economy into a financial center, Reuters reported, citing interviews with officials and corporate executives.

Industrial commodity producers were other main winners, buoyed by the improved trade outlook. Indian zinc miner Vedanta added 3.8% and copper and aluminum producer Hindalco Industries gained 3.6% in Mumbai.

-- Nimesh Vora

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