Most Asian shares edge up after Wall St gains, but China down

By Andrew Galbraith

SHANGHAI (Reuters) - Asian stocks eked out gains on Wednesday, with sentiment boosted by Wall Street's rise and a record intraday high for the S&P 500 index on Tuesday, but fragile Chinese markets retreated after two days in the black.

Shares in much of the region were also aided by hopes that the trade talks between the U.S. and China expected this week will ease trade tensions.

But Chinese investors sold shares across the board, sending both the Shanghai Composite index and blue-chip CSI300 index down 0.5 percent, as economic concerns returned after the central bank said on Tuesday it would not resort to strong stimulus to support growth.

U.S. President Donald Trump told Reuters on Monday that he does not expect much progress from the trade talks with China.

MSCI's broadest index of Asia-Pacific shares outside Japan was up 0.3 percent, while Japan's Nikkei stock index advanced 0.7 percent.

Seoul's Kospi rose 0.4 percent, buoyed by tech firms as data showed robust chip exports, and Taiwan shares were 0.2 percent higher.

But S&P futures turned lower on Wednesday morning as markets assessed the possible impact of a guilty plea from Trump's former personal lawyer, and the conviction of former Trump campaign chairman Paul Manafort.

"Next to these headlines, trade news fell completely under the radar," Citi analysts said, noting "concern that something could come out linked to Trump or other of his associates" and that Cohen's guilty plea sparked a late-session bid in U.S. treasuries.

S&P E-mini futures were 0.2 percent lower at 2855. The yield on benchmark 10-year Treasury notes fell to 2.8298 percent compared with its U.S. close of 2.844 percent on Tuesday.

Investors are also looking to Wednesday's release of minutes from the U.S. Federal Reserve's August meeting, and a speech by Fed Chairman Jerome Powell on Friday for clues on future rate hikes.

Trump on Monday told Reuters he was "not thrilled" with the Fed under his appointee Powell for raising rates, and said the U.S. central bank should do more to boost the economy.

The two-year yield, which rises with traders' expectations of higher Fed fund rates, were at 2.5996 percent Wednesday compared with a U.S. close of 2.608 percent.

Australian shares fell 0.3 percent the day after a leadership challenge to Prime Minister Malcolm Turnbull.

"There's a bit of a risk premium now being built into Australia," said Hugh Dive, chief investment officer at Atlas Funds Management in Sydney. "If you're a foreign investor, suddenly Australia's looking a lot less attractive."

In New York on Tuesday, the S&P 500 rose as high as 2,873.23, topping the previous record of 2,872.87 set on Jan. 26, and is poised to become the longest-running bull market in the index's history on Wednesday.

The Dow Jones Industrial Average closed up 0.25 percent to 25,821.95, the S&P 500 rose 0.21 percent to 2,862.91, and the Nasdaq Composite added 0.49 percent to 7,859.17.

On Wednesday, the dollar edged higher against the yen, gaining 0.06 percent to 110.36.

The dollar index, which tracks the greenback against a basket of six major rivals, was 0.04 percent lower 95.220.

The currency has lagged following Trump's comments on Monday, in which he also accused China and Europe of manipulating their currencies.

The euro was up 0.05 percent on the day at $1.1575, while China's yuan strengthened to 6.8437 per dollar at 0257 GMT, 76 pips stronger than its previous onshore close.

In commodity markets, U.S. crude rose 0.4 percent to $66.10 a barrel. Brent crude was 0.3 percent higher at $72.81 per barrel.

Spot gold was flat, after earlier rising 0.2 percent to $1,197.76, its highest level since Aug. 14.

(Reporting by Andrew Galbraith; Editing by Eric Meijer and Richard Borsuk)