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Nikkei Markets

Hong Kong shares up on trade talk bets and Turkey rate hike

China Re rises on acquisitions, while Geely gains after hybrid partnership report

HONG KONG (Nikkei Markets) -- Hong Kong shares extended gains on Friday, helped by expectations for renewed trade talks between the U.S. and China and advances by emerging market assets after an interest rate increase in Turkey.

The Hang Seng Index added 0.8% to 27,232.54 by noon after logging its best single-day advance in more than two years on Thursday. Sun Hung Kai Properties climbed 2.7% following a 19.6% increase in net profit for the year ended June 30. CK Infrastructure Holdings added 1.5%. The company is considering listing some U.K. assets through an initial public offering in London, Bloomberg reported, citing people with knowledge of the matter.

The extended rebound for the city's main gauge came after three major U.S. equity indexes advanced overnight. While the U.S. invitation to engage in trade talks with China is being seen as positive, analysts have been skeptical that the trade tensions could be resolved before the U.S. midterm elections later this year. Markets have been worried over the possible introduction of additional import tariffs on $200 billion worth of Chinese goods, after Washington and Beijing levied duties on goods worth $50 billion.

President Donald Trump on Thursday tweeted that the U.S. is "under no pressure to make a deal with China."

"It is normal for the Hang Seng Index to rebound for two days after a long losing streak, but I cannot say for sure that the market has bottomed out from the recent low," said Felix Man, executive director at Future Land Resources Capital Group. "The U.S. consumer will suffer if tariffs on $200 billion Chinese goods are imposed. Therefore, it will not be good for Trump" in the mid-term elections, he added.

Emerging market assets got a boost after the Turkish central bank on Thursday raised its key interest rate to 24% to curb accelerating inflation. The Turkish lira edged lower on Friday after about a 4% rally against the dollar on Thursday, while the Indian rupee set course for a third consecutive advance against the greenback.

In the mainland, the Shanghai Composite fell 0.1%, while its Shenzhen counterpart slipped 0.5%. The yuan traded onshore declined 0.2% against the U.S. dollar to 6.8539. Data released on Friday showed China's retail sales and industrial output increased 9% and 6.1% on-year in August. Fixed-asset investment growth slowed to 5.3% in the January-August period after coming in at 5.5% for the first seven months of the year.

Geely Automobile Holdings rose 0.9% in Hong Kong. Any partnership between Geely and another automaker on hybrid-car technology would be mutually beneficial to both, a company official said on Friday, following a Bloomberg report that Japan's Toyota Motor was in advanced talks with it for a license deal.

Jewelry maker Continental Holdings jumped 5.5% after saying it expects a "significant" increase in profit for the year ended Jun. 30.

China Reinsurance Group rose 1.4% after saying it agreed to buy three specialty insurance units from U.S.-based Hanover Insurance Group for consideration of $820 million, plus a contingent consideration of $45 million.

Fast-moving consumer goods seller Heng Tai Consumables Group slumped 6.4% after saying it expects revenue for the year ended in June to have decreased.

APAC Resources fell 1.7% after saying it expects net profit for the year ended in June to have declined as much as 56% from a year ago.

Coal miner Hidili Industry International Development slipped 1.8% after reporting a 45% decrease in raw coal production for August.

-- Amy Lam

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