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Nikkei Markets

Rising US yields drag Nikkei Asia300 Index lower

Chinese financials drop, while Tencent up after 1Q results beat expectations

HONG KONG (Nikkei Markets) -- Asian stocks outside of Japan extended loss on Thursday, as concerns over trade relations between the world's largest economies and rising U.S. bond yields weighed on sentiment.

The Nikkei Asia300 Index dropped 0.5% to 1,404.93. Mainland financials listed in Hong Kong contributed heavily to Thursday's drop, with China Construction Bank (CCB) and Industrial and Commercial Bank of China (ICBC) shedding 1.7% and 1.9%, respectively. Insurers AIA Group and Ping An Insurance Group lost 1.3% and 0.4%. Samsung Electronics, one of the heaviest weighted stocks on the gauge, shed 0.9% in Seoul.

Investors will be watching trade talks between the U.S. and China in Washington that are set to start later on Thursday after a similar meeting in Beijing earlier this month ended with no firm conclusions on bilateral trade.

Regional investors were also concerned about rising U.S. Treasury yields, as the lure of better returns from top-rated government debt threatened to pull cash away from more risky emerging market assets. The yield on 10-year U.S. Treasury bonds closed at 3.1% on Wednesday, a level not seen since 2011.

Social media giant Tencent Holdings rose 3.7% in Hong Kong after reporting a 61% jump in March quarter net profit and a 48% increase in revenue late Wednesday. Smartphone gaming revenue for the period surged 68% from a year ago. The stock had risen as much as 7% earlier on Thursday.

"We expect the solid first-quarter results to ease market's concern on game revenue growth," Analysts at Bocom International wrote in a note. "While we have concern on PC game growth in the second quarter, we expect solid mobile game performance and new personal-computer games to drive game revenue growth in 2H18."

Singapore Telecommunications, the city-state's largest telecommunications company, rose 0.6%. The company on Thursday reported a net profit of S$781 million ($582.7 million) for the fourth quarter, a 19% drop on year. Group revenue for the January-March period edged up 0.4% to S$4.33 billion, the company said. On a constant exchange-rate basis, quarterly net profit fell 15.6%.

Data released by Enterprise Singapore Thursday showed the city's non-oil domestic exports grew 11.8% year-on-year in April, recovering from a two-month decline. Most expectations ranged around 7%.

Exports of electronics fell 6.9% in April, a fifth consecutive month of declines, while non-electronic exports expanded 19.6%. Pharmaceutical shipments rose 44% and those of non-monetary gold, which excludes gold held as a reserve asset, surged 85%.

Separately, data showed Malaysia's economic growth decelerated in the first quarter of 2018 from the previous quarter. Gross domestic product of the third-largest Southeast Asian economy grew 5.4% between January and March when compared with the same quarter last year, the central bank said. That compares with the fourth quarter's 5.9% print and a Nikkei Markets poll estimate of 5.6%.

The Nikkei Asia300 ASEAN Index for Southeast Asian companies dropped 0.8%.

--V. Phani Kumar

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