Prime Minister Theresa May is struggling to rally MPs behind her Brexit deal with less than two weeks before Britain is due to leave the European Union (Adrian DENNIS)

Hong Kong (AFP) – Asian markets rallied Monday, building on last week’s healthy gains with investors buoyed by optimism over China-US trade talks and forecast-busting Chinese factory data.

Top negotiators from China and the US flagged progress in last week’s discussions in Beijing on the tariffs row, with another round slated for this week in Washington.

While there have been few details, the general view on trading floors is that the economic superpowers are heading towards a deal that will end a long-running spat that helped sink global markets towards the end of last year.

Confidence an agreement will be reached helped overcome concerns about the world economy that saw a sharp sell-off in equities at the start of last week.

Beijing announced it would extend a delay on imposing tariffs on US cars, while also adding fentanyl to a list of controlled substances, two key concessions to Washington that have added to hopes for the trade deal.

“What matters is not whether these are big concessions or not, but that they are a quick response to the US concerns,” Gai Xinzhe at Sino Ocean Capital told Bloomberg News. “This is good for enhancing mutual trust in the negotiations.”

A positive lead from Wall Street was picked up in Asia, with Tokyo ending 1.4 percent higher, Hong Kong adding 1.8 percent and Shanghai soaring 2.6 percent.

Sydney added 0.6 percent, Singapore jumped 0.9 percent and Seoul piled on 1.3 percent, with Taipei, Mumbai, Bangkok, Jakarta and Wellington also in the green.

The rises were supported by a sharp jump in an index of Chinese manufacturing activity, which soothed concerns about the world’s number two economy and a key driver of the global economy.

– EU patience ‘running out’ –

The Purchasing Managers Index for March showed growth in the sector for the first time in four months and was far better than expected. On Monday a separate PMI that takes into account small businesses also jumped into expansion territory.

“The manufacturing print … will go a long way to allaying slowdown fears about China, at least in the short-term as the US-China trade talks move back to Washington this Wednesday,” said OANDA senior market analyst Jeffrey Halley.

Attention once again returns to Britain, where Prime Minister Theresa May failed on Friday to pass her Brexit deal through parliament, stoking uncertainty with just over a week before the deadline for leaving the European Union.

With MPs still unable to agree on a way forward there are fears the country will crash out of the bloc without a deal, putting pressure on the pound.

Lawmakers will hold a series of votes Monday to try to find a majority-backed plan to end the current crisis, though European Commission President Jean-Claude Juncker has said the EU is “running out” of patience as the saga plods on.

“Brexit is a mess, and sterling traders are getting bored with the continued political point scoring that has plagued the whole process,” said James Hughes, chief market analyst at AxiTrader.

“The closer we get to the proposed deadline of April 12 the more volatility we will surely see.”

In other currency trading, most high-yielding, riskier units were up against the dollar as confidence improves.

However, Turkey’s lira was down one percent after the party of President Recep Tayyip Erdogan suffered election losses in Ankara while it was also on course for a defeat in economic hub Istanbul.

The poll was seen as a test for the ruling AKP with the country suffering a painful economic slowdown that has battered the lira.

In early trade London rose 0.6 percent, while Frankfurt and Paris each added 0.8 percent.

– Key figures around 0810 GMT –

Tokyo – Nikkei 225: UP 1.4 percent at 21,509.03 (close)

Hong Kong – Hang Seng: UP 1.8 percent at 29,562.02 (close)

Shanghai – Composite: UP 2.6 percent at 3,170.36 (close)

London – FTSE 100: UP 0.6 percent at 7,319.74

Pound/dollar: UP at $1.3060 from $1.3023 at 2100 GMT on Friday

Euro/pound: DOWN at 85.99 pence from 86.14 pence

Euro/dollar: UP at $1.1245 from $1.1217

Dollar/yen: UP at 111.09 yen from 110.82 yen

Oil – West Texas Intermediate: UP 56 cents at $59.70 per barrel

Oil – Brent Crude: UP 91 cents at $68.49 per barrel (new contract)

New York – Dow: UP 0.8 percent at 25,928.68 (close)

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