HONG KONG (Nikkei Markets) -- Hong Kong shares ended higher for the week despite losses on Friday as optimism over Sino-American trade relations grew amid indications that both nations are planning to lift tariffs on goods imported from each other.
The Hang Seng Index slipped 0.7% to 27,651.14 on Friday, but ended the week 2% higher. Among heavyweight decliners on Friday, social media and gaming company Tencent Holdings fell 1.9%, while China Construction Bank shed 1.4%.
Apple supplier AAC Technologies Holdings lost 0.5% after reporting a 28.6% decline in third-quarter net profit.
The Hang Seng Index closed at three-month highs on four out of five trading days this week amid signs that the U.S. and China might sign a preliminary trade deal soon. China's Ministry of Commerce on Thursday said Beijing and Washington had agreed to roll back tariffs on each other's goods in phases. White House economic adviser Larry Kudlow later confirmed that if there was a phase one trade deal, there would be tariff agreements and concessions.
Still, gains were limited as the trade war between the U.S. and China has escalated over the past several months, with both sides showing little signs of backing down until recently.
"News flow has been quite erratic. We need to be very cautious," said Ronald Wan, chief executive at Partners Capital International. Even though the index has gained "quite a bit" in the past week, Wan said there would be room for a bit more upside if the two countries made a deal.
The index's 14-day relative strength index, a measure of momentum, breached the 70 level for the first time since April on Thursday, an indication to some technical analysts that the index might be overbought.
On the mainland, the Shanghai Composite Index fell 0.5% on Friday.
Index provider MSCI on Thursday said the weightage for Chinese stocks, or A-shares, in its Emerging Market Index would rise to 4.1% from 2.55%. The change would be implemented as of the close on Nov. 26, MSCI said.
United Company Rusal fell 3.9% in Hong Kong after the aluminum producer reported a loss of $34 million for the third quarter, compared with a year-earlier profit of $338 million, amid declining aluminum prices and shrinking margins.
Personal computer maker Lenovo Group lost 3.8%, extending Thursday's weakness after it reported second-quarter earnings. The company's quarterly earnings exceeded expectations, but it warned that a shortage of components that has hobbled growth could persist into the first half of next year.
Great Wall Motor advanced 3.6% after the Chinese automaker reported a 4.5% increase in total sales volume for October.
Electric carmaker BYD added 3% after saying it had entered a joint venture agreement with Japan's Toyota Motor to establish a research and development company focused on battery electric vehicles.
Advertising services provider BC Technology Group jumped 9.6% after saying its unit OSL Digital Securities had submitted an application to the Securities and Futures Commission for a license to operate as a virtual asset trading platform in Hong Kong.
-- Benny Kung