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Nikkei Markets

Nikkei Asia300 recovers but trade war concerns remain

ZTE jumps after US signs escrow agreement to lift ban

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan recovered on Thursday, helped by a surge in ZTE's shares and a rebound for some heavyweights, even as trade tensions continued to dominate sentiment.

The Nikkei Asia300 Index added 0.5% to 1,306.27. Indexes on Wall Street snapped a four-day winning streak overnight after the U.S. threatened to impose tariffs on a further $200 billion worth of Chinese goods. Separately, the U.S. Department of Commerce on Wednesday said it was starting a new anti-dumping duty investigation on imports of steel racks from China.

"The potential imposition of further tariffs on imports from China reaffirms our view that trade tensions will likely linger for longer," Morgan Stanley analysts including Chetan Ahya, wrote in a note. "However, we continue to expect negotiations and de-escalation to remain the end outcome."

Morgan Stanley said investors will watch for China's response and countermeasures.

Technology heavyweights Tencent Holdings and Taiwan Semiconductor Manufacturing Co. (TSMC) advanced 0.2% each on Thursday following losses in the previous session.

Chinese telecommunications equipment maker ZTE surged 25.1% in Hong Kong. U.S. authorities on Wednesday signed an agreement that paves the way for the Chinese company to resume doing business with American suppliers. A nearly three-month-long ban on dealings with ZTE will be lifted after it deposits $400 million into the escrow account. The stock, which lost 53% in June as it resumed trading after a near two-month-long halt, is up 17% so far this month.

China Eastern Airlines rose 3.4% after reporting a 13.7% increase to 9.89 million in the number of passengers it carried in June.

Energy producers in the region slipped after Brent crude futures plunged 6.9% on Wednesday. CNOOC and PetroChina slipped 0.2% and 0.4%, respectively, in Hong Kong, while Sapura Energy shed 0.8% in Kuala Lumpur. The three stocks recovered from intraday lows as Brent crude futures climbed 2% on Thursday.

Drugmaker Lupin fell 1.8% in Mumbai. The company on Wednesday said it has expanded an existing partnership with Germany's Boehringer Ingelheim to co-market two new oral antidiabetic drugs in India.

Dr. Reddy's Laboratories climbed 2.4%. London-listed Indivior warned on Wednesday that it would miss its full-year profit target amid rising competition in the U.S. for its opioid addiction drug. Dr. Reddy's and U.S.-based Mylan recently received approvals for a generic version of the medicine.

--V. Phani Kumar

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