Pakistan Prime Minister Imran Khan has called for ‘better sense’ to prevail in the tense Kashmir stand-off with India, which has rattled markets (AAMIR QURESHI)

Hong Kong (AFP) – Asian markets mostly fell Thursday, led by Seoul, as a summit between Donald Trump and Kim Jong Un ended abruptly without an agreement.

Equities had been fluctuating through the day on tempered optimism over China-US trade talks, weak factory data from Beijing and fresh geopolitical tensions in Kashmir.

But they took a decisive turn south after an expected lunch and signing ceremony between the US and North Korean leaders was called off at the last minute.

The shock news came just hours after Kim raised the prospect of a permanent US diplomatic presence in Pyongyang and Trump said he was in “no rush” for a speedy deal over North Korea’s nuclear programme.

Both men left the summit venue in Hanoi without a public signing ceremony and Trump moved up his news conference by two hours, sparking doubts about the progress made at the meeting.

“The two leaders discussed various ways to advance denuclearisation and economic driven concepts,” White House press secretary Sarah Sanders said. “No agreement was reached at this time, but their respective teams look forward to meeting in the future.”

Seoul dived 1.8 percent and Tokyo ended 0.8 percent lower, while Shanghai shed 0.4 percent and Hong Kong was off 0.3 percent in the afternoon. Singapore shed 0.7 percent.

Manila and Jakarta were more than one percent down each while Bangkok slipped 0.4 percent, though there were gains in Sydney and Wellington.

The global rally that has characterised most of this year had already taken a knock after US Trade Representative Robert Lighthizer told lawmakers that “real progress” had been made in trade talks with China, but a lot of work was still needed before a pact is signed.

While his comments did not derail expectations of an agreement at some point — with both sides reporting good progress and Trump delaying a deadline for a deal — it did give traders pause for thought, observers said.

– ‘Better sense’ –

Lighthizer said a “trade deal hasn’t been agreed yet, bringing some reality back to euphoric markets post-Trump’s tariff extension, despite the fact Lighthizer also announced both sides had agreed on an enforcement process”, said OANDA senior market analyst Jeffrey Halley.

Also fuelling selling pressure was figures showing Chinese manufacturing activity contracted for a third straight month in February, with factories hit by the long Lunar New Year break, concerns about slowing growth and uncertainty from the trade row.

However, Zhou Hao, a senior emerging markets economist at Commerzbank AG, said the results were likely not as bad as they seemed and the outlook could be positive.

“I think we still want to wait for the next month’s reading as this month’s is distorted by the holiday,” he said.

“Also the economy could stabilise this month. Rising input prices suggest that there is no need to worry about deflation, so the question now rests on whether the economy has enough impetus.”

Nervousness continues to stalk trading floors after Pakistan and India said they had shot down each other’s fighter jets on Wednesday, fuelling worries of a conflict between the nuclear-armed neighbours.

The developments followed the February 14 suicide bombing by militants in the disputed Kashmir region that that killed 40 Indian troops.

Pakistan Prime Minister Imran Khan called for “better sense” to prevail.

On currency markets the pound held gains after touching a near eight-month high earlier Thursday after MPs gave Prime Minister Theresa May more time to work on her EU withdrawal deal after she promised they could delay Brexit if necessary.

Sterling was also given a boost after the opposition Labour Party said it would back a second referendum, having lost a vote on its own Brexit plan Wednesday.

– Key figures around 0705 GMT – 

Tokyo – Nikkei 225: DOWN 0.8 percent at 21,385.16 (close)

Hong Kong – Hang Seng: DOWN 0.3 percent at 28,677.39

Shanghai – Composite: DOWN 0.4 percent at 2,940.95 (close)

Pound/dollar: DOWN at $1.3297 from $1.3306 at 2150 GMT

Euro/dollar: DOWN at $1.1371 from $1.1372

Dollar/yen: DOWN at 110.77 yen from 111.00 yen

Oil – West Texas Intermediate: DOWN 15 cents at $57.79 per barrel

Oil – Brent Crude: DOWN 28 cents at $66.11 per barrel

New York – Dow: DOWN 0.3 percent at 25,985.16 (close)

London – FTSE 100: DOWN 0.6 percent at 7,107.20 (close)

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