HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher on Friday, tracking overnight advances on Wall Street, as hopes for a Sino-American trade deal grew after the two countries agreed to resume negotiations next month.
The Hang Seng Index added 0.6% to 26,672.60 by noon. U.K.-headquartered lender HSBC Holdings rose 1%, and diversified conglomerate CK Hutchison Holdings advanced 3%. Bourse operator Hong Kong Exchanges & Clearing gained 1.8%, as trading in its derivatives market resumed after being suspended on Thursday afternoon because of a software glitch. The malfunction the previous day was caused by a software bug, and the exchange operator is now using an older version of a software program, Chief Executive Charles Li said on Friday.
Overnight, the Dow Jones Industrial Average and the Nasdaq Composite rose 1.4% and 1.8%, respectively, after China's Ministry of Commerce said that American and Chinese officials would meet in early October in Washington to discuss bilateral trade. The decision followed a phone call between Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin.
The planned talks will mark the first face-to-face meeting between high-level officials since July. Trade tensions with China escalated after U.S. President Donald Trump announced plans in August to impose fresh tariffs that would cover virtually all goods imported from the mainland. Those tariffs took effect on some goods from Sept. 1, leading to a set of retaliatory levies by China. Deputy-level meetings will reportedly take place mid-September, ahead of the talks in October.
Hong Kong, meanwhile, is bracing for another weekend of protests even after Chief Executive Carrie Lam on Wednesday announced the withdrawal of a controversial extradition bill that led to months of demonstrations and unrest. The withdrawal only meets one of the protesters' five demands. Pro-democracy activists have said the move was "too little, too late."
"We need to wait until October for trade talks to resume, so investors will look at the development of the local situation in the coming few days," said Andrew Wong, chairman and chief executive at Anli Securities. "We need to see if the government will display more goodwill. People may see the withdrawal as a short-term appeasement."
If Hong Kong protests turn violent again, the Hang Seng Index will likely slip below 26,000 points, he added.
Fitch Ratings on Friday downgraded Hong Kong's long-term foreign-currency issuer default rating to "AA" from "AA+" because of continued unrest in the former British colony, as well as external headwinds brought on by the trade conflict.
Trade-sensitive Chinese companies advanced, with pork producer WH Group rising 2.8% and telecommunications equipment maker ZTE surging 9.3%. Italy's government on Thursday approved its use of special powers in supply deals for fifth-generation telecom services by a number of domestic companies with providers including ZTE, Reuters reported.
In the mainland, the Shanghai Composite Index edged 0.2% higher, while the yuan was little changed against the dollar at 7.1472.
Dongfeng Motor Group added 2.1% in Hong Kong following a 2.7% increase in total sales volume for August. France's PSA Group, the maker Peugeot cars, and its Chinese partner Dongfeng have come up with a plan to restructure their joint venture operations, including cutting costs and boosting production, Reuters reported.
China Gas Holdings slumped 6.3% following reports that a unit of diversified South Korean conglomerate SK Holdings had cut its stake in the company.
China SCE Group Holdings, which reported a 47% year-over-year increase in August sales, advanced 1%.
Clothing retailer Bossini International Holdings declined 5% after forecasting a loss of about HK$139 million ($17.7 million) for the year ended in June, compared with a loss of HK$29 million the previous year.
-- Benny Kung