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Nikkei Markets

Hong Kong shares slip after recent rally, with trade watched

Great Wall Motor climbs after October sales

HONG KONG (Nikkei Markets) -- Hong Kong shares headed lower from a three-month high on Friday, as investors paused after news that China and the U.S. are planning to lift tariffs on each other.

The Hang Seng Index slipped 0.4% to 27,726.04 by noon. Social media and gaming company Tencent Holdings fell 1.1%, while lending heavyweight China Construction Bank declined 0.8%.

Apple-supplier AAC Technologies Holdings lost 0.9% ahead of its third-quarter results announcement. During the midday break, the company reported a net profit of 695 million yuan ($99.4 million) for the quarter, down 28.6% from a year ago.

The Hang Seng Index on Thursday ended at a fresh three-month high after China's Ministry of Commerce said Beijing and Washington have agreed to roll back tariffs on each other's goods in phases. White House economic adviser Larry Kudlow later confirmed that if there is a phase one trade deal, there will be tariff agreements and concessions.

Market participants remained on the fence 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 is room for a bit more upside if the two countries make 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 may be overbought.

In the mainland, the Shanghai Composite Index added 0.4% by midday on Friday.

Index provider MSCI on Thursday said the weightage for Chinese stocks, or A-shares, in its Emerging Market Index will rise to 4.1% from 2.55%. The change will be implemented as of the closing on Nov. 26, MSCI said.

United Company Rusal fell 5.2% 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 1.3%, 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 3.8% after the Chinese automaker reported a 4.5% increase in total sales volume for October.

Electric carmaker BYD added 3.7% after saying it 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 10.9% after saying its unit OSL Digital Securities 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

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