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Nikkei Markets

Trade talks optimism lifts Hong Kong shares

Energy stocks rise amid rising oil prices while airlines climb after January data

HONG KONG (Nikkei Markets) -- Hong Kong shares rebounded from a two-week low on Monday, helped by fresh optimism over Sino-American relations with trade talks set to continue in Washington after a round of negotiations concluded in Beijing last week.

The Hang Seng Index climbed 1.6% to 28,347.01. PetroChina and China Petroleum & Chemical rose 4.6% and 3.2%, respectively, after Brent crude futures traded at their highest since November. Ping An Insurance Group advanced 1.8% following a 5.6% increase in the gross premium income for its life and health insurance businesses in January.

Internet services heavyweight Tencent Holdings advanced 1.8% after logging its worst weekly performance since December last week. Tencent is in talks with Electronic Arts to bring the U.S.-listed games publisher's new title Apex Legends to China, the South China Morning Post reported, citing people with direct knowledge of the matter.

Trade talks between the U.S. and China are set to resume in Washington this week. Last week, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met Chinese officials in Beijing. U.S. President Donald Trump on Friday said that Washington was closer than ever before to having a "real trade deal" with China. He said he would be "honored" to remove tariffs if an agreement could be reached.

"It seems that conditions for reaching a trade deal have matured, as both nations appear sincere," said Castor Pang, head of research at Core Pacific Yamaichi International. "They are willing to extend the negotiation deadline and make some concessions."

The U.S. and China are nearing the end of a 90-day truce in their months-long trade war, which has seen the two nations impose punitive tariffs on goods they import from one another. Trump reiterated the possibility of extending the March 1 deadline for the truce.

The Hang Seng Index's short-term trend has "some upside," Pang said, adding that he expected it to move toward the 30,000 level.

On the mainland, the Shanghai Composite Index added 2.7%.

China Southern Airlines rose 1.1% in Hong Kong following a 14% increase in the passengers it carried in January, while Air China added 2.3% after reporting an 11.3% increase in the same metric. China Eastern Airlines climbed 0.6%. On Friday, it said passengers carried in January increased 17.2% from a year ago.

China Pacific Insurance Group rose 2.9% after saying the January gross premium for its unit China Pacific Life Insurance was up nearly 3% from a year ago at 51.7 billion yuan ($7.63 billion). China Taiping Insurance Holdings was up 2.8% following a 9.6% increase in January life insurance premiums.

Engineering construction company Metallurgical Corp. of China rose 0.9% after reporting a 2.4% increase in newly signed contracts for January.

Guangzhou R&F Properties slipped 0.1% after saying it expects consolidated profit for 2018 to have decreased 60% from a year ago.

New City Development Group jumped 11.1% after saying its unit agreed to buy Gold Channel Holdings, which holds a property in Changchun, Jilin Province, for 450 million yuan from Junyi Investment.

Tongda Group Holdings, which makes components for electrical appliances, slid 6.5% after forecasting an up to 50% decline in 2018 profit from a year ago.

-- Amy Lam

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