HONG KONG: Asian stocks eased on Thursday (Feb 14) as traders anxiously awaited news from high-level US-China talks under way in Beijing while official data showed trade between the world's two largest economies plunged.
Negotiators kicked off discussions in the Chinese capital aimed at defusing a row that has already triggered tariffs on billions of dollars' worth of exports and threatened to stymie global growth.
Failure to resolve the dispute would initiate a sharp hike in US tariffs on US$200 billion of Chinese goods, although President Donald Trump indicated this week he could extend his Mar 1 deadline if progress is made in Beijing.
Trump told reporters in the Oval Office on Wednesday that preliminary discussions in Beijing had gone "very well", Bloomberg reported, adding that the US president was considering a 60-day deadline extension according to unnamed sources.
"Based on the positive signals from the US-China trade negotiations, further tariff hikes will likely be suspended," noted Louis Kuijs of Oxford Economics, as US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin met with China's top economic czar Liu He.
But a wide gulf remains on some issues. The US is demanding far-reaching changes to Chinese practices that it says are unfair.
Hong Kong dropped 0.2 per cent from its highest closing level in six months the previous day, while Shanghai edged down 0.1 per cent.
An unexpected rise in Chinese exports - particularly to Europe and Southeast Asia - had little bearing on markets as imports for January fell, with reciprocal tariffs taking effect and the domestic economy continuing to slow.
China's huge trade surplus with the US - a source of anger within the Trump administration - narrowed from December to US$27.3 billion.
But Chinese exports across the Pacific were down two percent, and American imports plunged 41 per cent, compared to the previous January.
"The broad trend in shipments still appears to be pointing down," said Julian Evans-Pritchard of Capital Economics.
"The downbeat outlook for global growth means that this year is likely to be challenging for Chinese exporters, even if the ongoing US-China trade negotiations culminate in a deal," Evans-Pritchard wrote in a research note.
In Hong Kong, smartphone component maker Sunny Optical dropped 4.9 per cent as a stock exchange filing showed a sharp fall in net profit for last year.
Tokyo edged fractionally down as investors locked in recent gains that had pushed the market to a two-month high.
Japanese government data showed the economy expanded in the final quarter of 2018, with the negative impact from a series of natural disasters over the summer receding.
But the quarter's 0.3 per cent expansion was slightly below forecasts.
In Europe, London opened 0.4 per cent higher, while Frankfurt won 0.8 percent and Paris advanced 0.9 per cent.
Oil prices extended gains after the International Energy Agency reported lower output from OPEC producers.
Both the main crude oil contracts lifted on the news that the Organization of the Petroleum Exporting Countries in January had largely complied with an agreement to cut production.
Prices were firmed up by US National Security Advisor John Bolton's warning that countries which buy Venezuelan resources including oil "will not be forgotten".
- Key figures around 0800 GMT -
Tokyo - Nikkei 225: FLAT at 21,139.71 (close)
Hong Kong - Hang Seng: DOWN 0.2 per cent at 28,432.05 (close)
Shanghai - Composite: DOWN 0.1 per cent at 2,719.70 (close)
London - FTSE 100: UP 0.4 per cent at 7,216.26
Euro/dollar: UP at US$1.1284 from US$1.1270 at 2130 GMT Wednesday
Dollar/yen: UP at ¥111.06 from ¥111.02
Pound/dollar: UP at US$1.2860 from US$1.2848
Oil - West Texas Intermediate: UP 47 cents at 54.37 per barrel
Oil - Brent Crude: UP 62 cents at US$64.23 per barrel
New York - Dow: UP 0.5 percent at 25,543.27 (close)