Optimism that China and the United States will eventually hammer out a trade deal has helped global markets rack up huge gains so far this year (MARIO TAMA)

Hong Kong (AFP) – Asian markets were mixed Thursday as growing expectations that China and the United States will reach a trade agreement were offset by profit-taking after an extended rally.

Hopes Britain will avert crashing out of the EU next week also instilled some optimism on trading floors, with the pound extending gains.

High-level talks between the world’s top two economies resumed Wednesday in Washington, with reports saying they are edging towards an agreement to bring the curtain down on a long-running row that helped batter markets last year.

Bloomberg News said the deal they are working on would give China until 2025 to meet pledges on purchases and to let US firms wholly own their businesses in the country.

It said the aim was to get everything in place for presidents Donald Trump and Xi Jinping to sign off on a trade deal.

White House economic adviser Larry Kudlow the talks were “making good headway” but added: “We’re not there and we hope this week to get closer.”

The Bloomberg report follows an article in the Financial Times saying they were closing in on an agreement. 

“The market is becoming more convinced that a deal is coming between China and the US,” Greg McKenna, at McKenna Macro, said in a note. “Enforcement on the US side and lifting tariffs to cement the deal on the Chinese side seem now to be the points of contention.”

David Madden, a market analyst at CMC Markets UK, pointed out that Kudlow had flagged movement on intellectual property theft and hacking, which are key bugbears of the White House.

“These issues have been a major point of contention for the US, and the fact that they are being discussed, indicates that Beijing are serious about reaching a deal,” he added.

– May, Corbyn hold talks –

Global stocks have enjoyed a stellar year so far thanks to confidence in a deal being reached.

In Asia on Thursday, Hong Kong fell 0.2 percent after a seven-day rally, while Sydney was off 0.8 percent, Wellington dropped 0.5 percent and Manila fell 0.7 percent.

However, Tokyo ended 0.1 percent higher and Shanghai jumped 0.9 percent, while Singapore and Seoul each added 0.2 percent.

Mumbai was flat, while India’s rupee fell 0.6 percent after the central bank cut interest rates for the second time this year, a week ahead of a general election and with the economy stuttering.

Asian investors were given a positive lead from Wall Street, although gains there were tempered by data showing private US firms hired new staff at their slowest pace for 18 months in March.

The below-forecast reading comes days before the release of key government figures, which are closely watched for an idea about the state of the US economy.

In London, Prime Minister Theresa May met opposition Labour leader Jeremy Corbyn on Wednesday for crisis talks on resolving the Brexit crisis with just over a week to go before Britain is due to leave the European Union.

Representatives for both sides described the talks as “constructive” as they look to avert a potentially calamitous no-deal divorce, with another meeting planned for Thursday.

At the same time MPs voted by the narrowest margin for draft legislation that would force the government to seek to delay Brexit beyond the April 12 deadline.

The premier has already said she will seek a second “short” delay at an EU summit on April 10.

The developments supported the pound but parliament remains divided with hardliners fearing a “soft” divorce will leave Britain still linked to the bloc.

In early trade London’s FTSE fell 0.6 percent, Paris shed 0.2 percent and Frankfurt was off 0.3 percent.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: UP 0.1 percent at 21,724.95 (close)

Hong Kong – Hang Seng: DOWN 0.2 percent at 29,936.32 (close)

Shanghai – Composite: UP 0.9 percent at 3,246.57 (close)

London – FTSE 100: DOWN 0.6 percent at 7,376.54

Pound/dollar: UP at $1.3190 from $1.3157 at 2040 GMT

Euro/pound: DOWN at 85.21 pence from 85.38 pence

Euro/dollar: UP at $1.1240 from $1.1234

Dollar/yen: UP at 111.35 yen from 111.48 yen

Oil – West Texas Intermediate: DOWN 10 cents at $62.36 per barrel

Oil – Brent Crude: DOWN two cents at $69.29 per barrel

New York – Dow: UP 0.2 percent at 26,218.13 (close)

Disclaimer: Validity of the above story is for 7 Days from original date of publishing. Source: AFP.