Donald Trump has said he would prefer to hammer out a broad trade deal with China, though reports say Beijing has narrowed the number of areas it is willing to discuss

Hong Kong (AFP) - Asian markets rose Tuesday as investors lock their focus on the resumption of China-US trade talks this week, though hopes for success are being tempered by mixed messages from both sides.

There has been a general feeling of positivity in recent weeks that a solution to the long-running tariffs saga can be found, providing some much-needed support to equities in the face of worsening economic data.

Beijing’s top trade envoy Liu He is due to meet with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin from Thursday.

But observers warn it is unlikely progress will be smooth, with reports this week saying China had cut back on the number of areas it is willing to discuss, suggesting leaders sense weakness in the White House as Donald Trump faces impeachment proceedings and a slowing economy.

Trump said late Monday he preferred to strike a big deal. “We’ve come this far. We’re doing well. I would much prefer a big deal and I think that’s what we’re shooting for,” he told reporters.

And on Monday, the US said it was blacklisting 28 Chinese entities it accuses of being implicated in rights violations and abuses targeting Uighurs and other mostly Muslim minorities in the Xinjiang region. The move bars them from buying US products.

The meeting comes just over a week before a new round of punitive tariffs is due to be imposed on China.

“A large percentage of the market thinks China may roll the dice and take advantage of what they think is Trump’s weakened political state, trying to push negotiations” closer to next November’s presidential election, said Stephen Innes, Asia-Pacific market strategist at AxiTrader.

- Trump hardball? -

“In this context… Trump may decide to hardball the upcoming talks, suggesting there could be a high level of disappointment even relative to the market’s muted expectations.”

Still, regional markets were enjoying some much-needed buying support Tuesday as the Chinese delegation heads to Washington.

Hong Kong edged up 0.3 percent as dealers returned from a long weekend break to mixed US jobs data that eased concerns about a US recession while also keeping expectations for an interest rate intact.

The gains come despite more violent protests in the city, which closed down the subway system on Saturday and caused numerous businesses to shutter.

Shanghai ended up 0.3 percent following the week-long National Day celebrations, while Tokyo closed one percent higher.

Sydney and Singapore were each 0.5 percent higher, Seoul rose 1.2 percent, Manila jumped 0.7 percent, Taipei added 0.8 percent and Jakarta put on 0.4 percent. Wellington and Bangkok were also up.

“The fact that both sides are due to meet is seen as positive step, and just because Beijing are not willing to alter their position on certain topics, don’t mean that progress can’t be made in other areas,” said David Madden, market analyst at CMC Markets UK.

Also on the agenda for investors is the release this week of minutes from last month’s Federal Reserve policy meeting, which will provide an idea about the bank’s thinking leading up to its rate cut, while the third-quarter earnings season also gets underway.

On currency markets most higher-yielding units were up against the dollar, boosted by hopes for the trade talks.

But the Turkish lira was down more than one percent after Trump threatened to “obliterate” the country’s economy if it overstepped the mark in Syria, a day after giving Ankara a green light to invade its southern neighbour.

In early trade London edged up 0.2 percent, Frankfurt eased 0.1 percent and Paris was 0.1 percent higher.

- Key figures around 0810 GMT -

Tokyo - Nikkei 225: UP 1.0 percent at 21,587.78 (close)

Hong Kong - Hang Seng: UP 0.3 percent at 25,893.40 (close)

Shanghai - Composite: UP 0.3 percent at 2,913.67 (close)

London - FTSE 100: UP 0.2 percent at 7,208.29

Euro/dollar: UP at $1.0980 from $1.0970 at 2040 GMT

Pound/dollar: DOWN at $1.2276 from $1.2297

Dollar/yen: UP at 107.35 yen from 107.29 yen

West Texas Intermediate: UP 34 cents at $53.09 per barrel

Brent North Sea crude: UP 41 cents at $58.76 per barrel

New York - Dow: DOWN 0.4 percent at 26,478.02 (close)