Asian, European markets start week on positive note

Hopes that China and the US can resolve their trade row has provided support to markets AFP/Johannes EISELE

Wall Street ended last week with gains following a report that top officials from the world's two biggest economies would hold talks to resolve a crisis that has seen them hit each other with tariffs on billions of dollars worth of goods, with more in the pipeline.

The report in the Wall Street Journal said the talks were aimed at easing the trade dispute before President Donald Trump and Chinese President Xi Jinping hold a summit in November.

The possibility that the months-long row which has battered world markets could be brought to an end was enough to spur optimism on trading floors.

Greg McKenna, chief market strategist at AxiTrader, pointed out that Beijing, which is struggling to support the economy while also addressing a debt mountain, may have had a "lightbulb moment" last week with the release of more weak data and a sharp drop in the troubled yuan.

Authorities in China appeared to be moving to support the yuan last week as it headed towards seven to the dollar, its weakest level since January 2017.

Some observers have suggested the central bank has been letting the yuan soften in recent weeks to offset the effects of any US tariffs, a claim China has denied.

'WINNING AGAIN'

"President Trump is winning again," he said. "That's the takeaway he's likely to get from news that China's resolve may be cracking and the trade delegation being sent to Washington is not as low-level as many thought."

Hong Kong rose 1.4 per cent and Shanghai closed up 1.1 per cent, while Sydney climbed 0.1 per cent and Seoul ended with marginal gains.

Jakarta soared two per cent, while Wellington and Taipei also posted gains.

Tokyo pared early losses to end 0.3 per cent lower.

In early European trade London rose 0.5 per cent, Paris added 0.6 per cent and Frankfurt gained 0.9 per cent.

On currency markets the Turkish lira was hovering above six to the dollar, well off the record levels around seven seen last week but still facing pressure after Ankara and Washington traded fresh sanctions threats as the row over a jailed American pastor drags on.

Ratings agency Standard & Poor's on Friday downgraded Turkey's sovereign debt for the second time in four months and warned of a recession in 2019.

"The worry over Turkey's currency crisis eased slightly last week as the lira rebounded against the US dollar. But this isn't the end of the problem," said Masayuki Kubota, chief strategist at Rakuten Securities.

Attention now turns to this week's annual central bankers' symposium at Jackson Hole in Wyoming, which will be followed for clues on US interest rate plans among other issues.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: DOWN 0.3 per cent at 22,199.00 (close)

Hong Kong - Hang Seng: UP 1.4 per cent at 27,598.02 (close)

Shanghai - Composite: UP 1.1 per cent at 2,698.47 (close)

London - FTSE 100: UP 0.5 per cent at 7,592.58

Dollar/yen: UP at 110.63 from ¥110.57 at 2100 GMT Friday

Euro/dollar: DOWN at US$1.1418 from US$1.1441

Pound/dollar: DOWN at US$1.2742 from US$1.2749

Dollar/Turkish lira: UP at 6.09 lira from 6.03 lira

Oil - West Texas Intermediate: DOWN four cents at US$65.87 per barrel

Oil - Brent Crude: DOWN two cents at US$71.81 per barrel

New York - Dow Jones: UP 0.4 per cent at 25,669.32 (close)