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Nikkei Markets

Nikkei Asia300 Index drops as Sino-American trade talks begin

Tencent drops in Hong Kong, while UOB retreats in Singapore despite upbeat results

HONG KONG (Nikkei Markets) -- Asian stocks fell on Thursday, with investors appearing to tread cautiously as a U.S. team arrived in China for talks after weeks of trade-related tensions between the two nations.

The Nikkei Asia300 Index dropped 1.2% to 1,403.84, while the ASEAN Index for Southeast Asian companies shed 1.5%. Tencent Holdings, Asia's most valuable company, dropped 2.1%, halting a three-day winning streak. Financial heavyweights Industrial & Commercial Bank of China (ICBC) and Ping An Insurance Group fell 2% and 1.4% in Hong Kong.

Investors turned averse to risk as they awaited the outcome of a two-day meeting on bilateral trade in Beijing between U.S. and Chinese officials. Delegations led by U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are expected to discuss the way forward for trade between the world's largest economies after both countries imposed a slew of import tariffs on each other's products in recent weeks.

"There is a concern that a breakthrough in the trade tensions will be unlikely and any suggestions that there will be a breakdown in talks between the two largest economies in the world presents a risk that the financial markets will react," Jameel Ahmad, global head of currency strategy & market research at FXTM, wrote in a note. "The trade talks carry the potential to negatively impact global stocks as a result of reduced risk appetite."

Thursday's mood was also dominated by the U.S. Federal Reserve's widely expected decision on Wednesday to hold interest rates steady at its latest policy review. Markets are expecting the central bank to raise rates at least two more times this year as inflation moves closer to its target. Investors await U.S. nonfarm payrolls data for April, due Friday.

United Overseas Bank fell 1.4% in Singapore amid broad market losses despite reporting a 21% rise in net profit to 978 million Singapore dollars ($731.9 million). Total income rose 9% to S$2.23 billion due to growth in both net interest income, and fee-and-commission income.

DBS Group Holdings, which earlier this week reported a 26% rise in first-quarter net profit, slid 4.3%.

StarHub, Singapore's No. 2 telecommunications company, rose 1.3%. At the end of the day's trading, the company said Thursday its first quarter net profit fell 14.9% from a year earlier, mainly due to lower mobile and Pay TV revenues.

Singapore builder Sembcorp Industries slipped 0.3% after reporting a 34.1% fall in first-quarter net profit to S$76.7 million from S$116.3 million a year ago as profit from its marine and urban-development divisions declined.

Guangzhou Automobile Group slid 5.3% in Hong Kong after reporting a 3.2% decline in sales volume for April to 164,315 units. The drop was led by a 45% tumble in sales for company's jeep-focused joint venture with Fiat Chrysler.

HCL Technologies tumbled 7.5% in Mumbai, extending Thursday's 4.8% drop after the software services exporter said its fourth-quarter net profit declined 9.9% from the year-ago.

--V. Phani Kumar

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