Asian markets were mixed Thursday as investors weighed hopes for trade talks against Donald Trump's ban on US firms from using foreign telecoms equipment, which has been seen as a kick against China.
It was also added to a blacklist restricting US sales to the firm, which will likely ramp up tensions with Beijing as the two economic titans engage in a drawn-out trade war that threatens global growth.
The Trump administration has for months tried to persuade allies not to allow China a role in building next-generation 5G mobile networks, warning that doing so would result in restrictions on sharing of information with the United States.
The announcement comes after the US last week hiked tariffs on USD 200 billion of Chinese goods, to which Beijing retaliated in kind, fanning fears their trade war - which seemed all but over just weeks ago - could worsen.
"Earlier, the US Commerce Department had added Huawei to a list of entities that prohibits them from acquiring US-made technology and components without a government licence," said OANDA senior market analyst Jeffrey Halley.
"If that's not an escalation in trade tensions, then I don't know what is."
Regional markets retreated in early trade but some saw a turnaround as the day went on, taking on a positive lead from Wall Street and Europe, where investors cheered reports the White House was planning to delay tariffs on auto imports while seeking agreements with key trading partners.
Hong Kong ended flat, although ZTE -- another Chinese telecoms equipment provider -- shed more than six percent.
The dollar fell against most of its major peers and most higher-yielding currencies, with speculation swirling that the Federal Reserve could cut interest rates to fend off the effects of the trade war and slowing economic growth.
Such talk comes just months after some commentators had been predicting up to three hikes this year.
"I wouldn't expect any big change in the short term, but the possibility of a cut much later in the year has risen.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)