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Nikkei Markets

Hong Kong shares rise on US-China trade deal hopes

Chinese airlines gain after reporting double-digit pick up in passenger traffic

HONG KONG (Nikkei Markets) -- Hong Kong shares headed higher from a two-week low on Monday, helped by fresh optimism over Sino-American relations as trade talks were set to continue in Washington after a round of negotiations concluded in Beijing last week.

The Hang Seng Index climbed 1.5% to 28,322.74 by noon after sliding 1.9% on Friday. Ping An Insurance Group advanced 1.8% following a 5.6% increase in the gross premium income for its life and health insurance businesses in January. Internet services heavyweight Tencent Holdings rose 2% after last week logging its worst weekly performance since December.

Trade talks between the U.S. and China are set to resume in Washington this week. Last week, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met Chinese officials in Beijing. U.S. President Donald Trump on Friday said that Washington was closer than ever before to having a "real trade deal" with China. He said he would be "honored" to remove tariffs if an agreement can be reached.

"It seems that conditions for reaching a trade deal have matured, as both nations appear sincere," said Castor Pang, head of research at Core Pacific Yamaichi International. "They are willing to extend the negotiation deadline and make some concessions."

The U.S. and China are nearing the end of a 90-day truce in their monthslong trade war, which has seen the two nations impose punitive tariffs on goods they import from one another. Trump reiterated the possibility of extending the March 1 deadline for the truce.

The Hang Seng Index's short-term trend has "some upside," Pang said, adding that he expects it to move toward the 30,000 mark.

In the mainland, the Shanghai Composite Index added 1.8%, while the yuan traded onshore rose 0.2% to 6.7545 against the dollar.

China Southern Airlines rose 2.5% in Hong Kong following a 14% increase in the passengers it carried in January, while Air China added 2.4% after reporting an 11.3% increase in the metric. China Eastern Airlines climbed 1.4%. On Friday, it said passengers carried in January increased 17.2% from a year ago.

China Pacific Insurance Group rose 2.9% after saying the January gross premium for its unit China Pacific Life Insurance was up nearly 3% from a year ago at 51.7 billion yuan ($7.63 billion). China Taiping Insurance Holdings was up 2.8% following a 9.6% increase in January life insurance premiums.

Engineering construction company Metallurgical Corp. of China rose 1.4% after reporting a 2.4% increase in newly signed contracts for January.

Guangzhou R&F Properties slipped 0.5% after saying it expects consolidated profit for 2018 to have decreased 60% from a year ago. New City Development Group jumped 6.2% after saying its unit agreed to buy Gold Channel Holdings, which holds a property in Changchun, Jilin Province, for 450 million yuan from Junyi Investment.

Tongda Group Holdings, which makes components for electrical appliances, slid 6.5% after forecasting an up to 50% decline in 2018 profit from a year ago.

-- Amy Lam

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