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China Stocks gain with eyes on US-China trade talks

The Mainland China equity market closed higher in volatile trade on Friday, 11 October 2019, as investors took an optimistic stance ahead of the outcome of the U.S. and China high-level trade negotiations in Washington later in global day. At closing bell, the benchmark Shanghai Composite Index rose 0.88%, or 25.95 points, to 2,973.66. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.31%, or 5.13 points, to 1,636.97. The blue-chip CSI300 index climbed 0.96%, or 37.09 points, to 3,911.73. All SSE sectors rallied across the board, with financials and energy firms leading the gains.

Investor sentiment got a boost after trade negotiations between the United States and China resumed on Thursday for the first time since July 2019. The U.S. and China are currently in the midst of high-level trade negotiations in Washington.

Investors expects that top-level U.S.-China trade talks would yield at least a partial deal, after President Donald Trump tweeted he would meet Chinese Vice Premier Liu He on Friday for further trade talks and Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation in the trade war.

Market participant's eyes on outcome of the trade talks in Washington D.C. between the U.S. and China with import tariffs set for $250 billion worth of Chinese goods at a rate of 30% from 25% on 15 October 2019. A 15% tariff on an additional $160 billion worth of Chinese imports is also expected to kick in on 15 December 2019. The world's two largest economies seek to reach a deal to end their protracted trade war that has seen tariffs slapped on billions of dollars worth of each other's goods since the start of 2018, battering financial markets and souring business and consumer sentiment, and driven worries over the global economic outlook.

Investors hopes that top-level U.S.-China trade talks would yield at least a partial deal, after President Donald Trump tweeted he would meet Chinese Vice Premier Liu He on Friday for further trade talks and Liu said Beijing was willing to reach an agreement with Washington to prevent any further escalation in the trade war.

CURRENCY NEWS: China's yuan rallied after reports currency pact may be included in possible interim US trade war deal. The Trump administration is weighing the inclusion of an agreement on exchange rates in a mini trade deal that could lead to a suspension of the US tariff increase on Chinese goods scheduled to take place next week. Pact may to be similar to the proposed United States-Mexico-Canada Agreement (USMCA), including refraining from currency devaluations. The USMCA currency section, as currently written, requires the signatories to refrain from currency devaluations to seek trade advantage and also increases transparency of information sharing about government foreign exchange operations such as currency market interventions.

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