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Nikkei Markets

Singapore shares gain amid Asian rally, Malaysia falls

Ebbing tension over US-China trade tussle cheer investors

SINGAPORE (Nikkei Markets) -- Singapore shares rallied Monday along with the rest of Asia as investors drew comfort after U.S. and China softened import tariff threats against each other, while announcing intent to work out details of a wider deal. Malaysia shares slipped.

The Straits Times Index started the week 0.5% higher at 3548.23 thanks to industrial and real estate stocks. The FBM KLCI meanwhile, bucked the regional trend and fell 0.1% to 1853.58 as declines in telecommunication stocks eroded gains in consumer and plantation plays.

"We have to be a bit cautious [in Malaysia] as it's a new government," said Libra Invest Chief Executive Jason Lee. "We don't know what they would do other than what's been underlined in their manifesto."

On Sunday, U.S. Treasury Secretary Steven Mnuchin said the trade war was "on hold" following talks with officials from the world's second-largest economy over the weekend.

A joint statement said the parties had agreed to "substantially reduce" the U.S. trade deficit with China, while the latter would significantly increase its purchases of U.S. goods and services. Both nations have agreed to increase the export of U.S. agricultural and energy products, it said.

"The de-escalation of trade frictions will remove one key near-term risk undermining the current synchronized growth path of the global economy and should be a stabilizing factor for the current global trade arrangement," United Overseas Bank said in an investor note Monday.

On economic data due this week, CMC Markets sales trader Oriano Lizza said he doesn't expect the U.S. May 2 FOMC minutes and Singapore GDP data to have a major impact on equities as a whole.

"Rising energy prices may be reaching overbought levels so a small correction in this industry could impact energy stocks going forward," said Lizza. "The overarching issue will be the ongoing trade talks and any indication of this easing points towards a positive outcome."

Singapore's heavyweight banks led gainers, with DBS Group Holdings adding 1.4% while United Overseas Bank rose 0.1%. Oversea-Chinese Banking Corp closed 0.7% higher.

City Developments closed up 2.2%. Last week, the group and Chinese co-working company Distrii announced the opening of a co-working facility in Singapore with over 900 work stations.

Rig-builder Sembcorp Marine edged up 2.3% on the day it announced that a unit had been awarded a contract by Shell Offshore to construct and integrate the hull, topsides and living quarters of a semi-submersible floating production unit.

In Malaysia, foreign investors sold 2.48 billion ringgit ($623.36 million) of equities, according to stock exchange data, in the heaviest outflow since Aug. 2013 following the historic defeat of National Front coalition that has governed Malaysia since 1957.

IOI Corp., Sime Darby Plantations and Kuala Lumpur Kepong added 1.7%, 0.7% and 0.8%. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange had risen to a six-week high at one point Monday, helped by higher U.S. soy oil prices.

Oil prices rose 0.2% to $78.66 a barrel as easing China-U.S. trade tensions fueled optimism over global demand. Sapura Energy and Hibiscus Petroleum rose 2% and 5.8%.

AirAsia X added 1.4%. The low-cost airline, which is likely to release quarterly results on Tuesday, had previously reported a 14% year-on-year increase in capacity, along with 13% growth in passenger traffic.

--Joannah Perez and Alexander Winifred

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