Asian shares up as US-China trade talks uplift mood

Further positive developments could also boost markets on Monday

Japan's Nikkei stock index gained 1 per cent on Friday on optimism about US-Chinese talks on ending a tariff war. AP

Asian shares rose on Friday after US President Donald Trump said he would meet with China's top trade negotiator, stirring hopes for an agreement.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 1.2 per cent, following on from gains on Wall Street. MSCI is a global provider of equity, fixed income and stock market indexes.

Australian shares climbed 0.8 per cent, while Japan's Nikkei stock index gained 1 per cent. Chinese blue-chips - stocks in a corporation with a reputation for reliability and the ability to operate profitably - added 0.5 per cent and Hong Kong China Enterprises Index gained 2 per cent.

The bullish market mood came after a first day of trade talks between top US and Chinese negotiators, characterised by Mr Trump as “very, very good”.

A White House official said the talks had gone "probably better than expected" and a US Chamber of Commerce official briefed by both sides raised the possibility of a currency agreement this week.

Even before Mr Trump's comments, hopes for an agreement helped to lift US markets. The Dow Jones Industrial Average added 0.57 per cent, the S&P 500 gained 0.64 per cent and the Nasdaq Composite rose 0.6 per cent.

But while optimism around trade talks helped to drive a "classic risk-on session" overnight, the lack of runaway enthusiasm reflected broader investor caution, said Matt Simpson, senior market analyst at GAIN Capital in Singapore. “We know that it's just a few words from Mr Trump.”

Further positive developments in trade talks could boost markets on Monday.

Analysts at National Australia Bank said freezing tariffs at current levels would be unlikely to reverse the trade-driven slowdown in economic growth.

"The uncertainty around unresolved structural issues such as IP  [intellectual property] theft and subsidies to state owned enterprises are likely to remain deterrents for a pick-up in much needed capital expenditure," they said in a morning note.

Meanwhile, developments towards a Brexit deal also helped sentiment.

A Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union in an orderly fashion, Irish Prime Minister Leo Varadkar said.