By Wayne Cole and Hideyuki Sano
SYDNEY/TOKYO (Reuters) - Asian shares rallied on Monday after U.S. and Chinese leaders brokered a truce in their trade conflict, a relief for the global economic outlook and a tonic for emerging markets.
Trade-exposed currencies led the early gains, with the Australian dollar notching a four-month peak, while the dollar dropped to one-month lows against the yuan.
"Markets are opening with a knee-jerk boost to risk appetite but time will tell how enduring the optimism proves to be," said ANZ economist Jo Masters. "There are already very different official takes on what was achieved at the meeting."
"But for now, both sides can claim a win," she added. "Perhaps not insignificantly, it provides a window to export the soybean crop from key Republican states, at least."
China and the United States agreed to halt additional tariffs in a deal that keeps their trade war from escalating as the two sides try again to bridge their differences with fresh talks aimed at reaching a deal within 90 days.
The White House said on Saturday that President Donald Trump told Chinese President Xi Jinping during high-stakes talks in Argentina that he would not boost tariffs on $200 billion of Chinese goods to 25 percent on Jan. 1 as previously announced.
"This U.S.-China agreement is thus better characterised as a 'mini-breakthrough' that puts a momentary pause on trade tensions rather than a comprehensive policy deal."
Investors chose to see the glass as half full and lifted the Aussie dollar 0.75 percent to $0.7360 .
The greenback eased against a basket of currencies to 96.993 , but also firmed on the yen to 113.57 . The euro added 0.3 percent to $1.1345 .
The Mexican peso jumped more than 1 percent to 20.185, helped also by reports that newly sworn-in Mexican President Andres Manuel Lopez Obrador may reverse his earlier plan to cancel construction of a new airport in the country's capital.
Powell was scheduled to testify on Wednesday to a congressional Joint Economic Committee. But the hearing is expected to be postponed to Thursday because major exchanges will be closed on Wednesday in honour of former U.S. President George H.W. Bush, who died on Saturday at the age of 94.
Treasuries rallied hard late on Friday to leave 10-year yields down at 2.99 percent before bouncing back to 3.035 percent early on Monday.
The progress on Sino-U.S. trade and an easier dollar could provide some support to commodity prices.
Oil posted its weakest month in more than 10 years in November, losing more than 20 percent as global supply outstripped demand.
Brent futures rose $2.40 to trade at $61.86 a barrel, while U.S. crude gained $2.28 to $53.21.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)