The rally came after Bloomberg reported that U.S. President Donald Trump wanted to reach an agreement on trade with Chinese President Xi Jinping at the Group-of-20 nations summit in Argentina later this month and has asked key officials to start drafting potential terms.
Xi was quoted by CCTV as saying after the call with Trump that the two leaders had hoped to expand trade cooperation.
"Positive comments from President Trump over US-China trade tension are cheering the market in the short term", said Tai Hui, chief market strategist for Asia Pacific at JP Morgan Asset Management.
Trump has asked key U.S. officials to begin drafting potential terms, Bloomberg said, adding that the push for a possible deal with China was prompted by his telephone call with Chinese President Xi Jinping on Thursday.
"Dollar moderation, the stabilising trade relationship between USA and China and more stimulus from Beijing will be the key ingredients to revive market confidence in Asia".
If you look at their economy, the Chinese economy is not doing well.
The moves also follow media reports that pointed to progress on the US-China trade dispute. 'But we have a chance to make a fair deal, because China has been hurting us and trade deals have been hurting us.
The onshore yuan was headed for its biggest two-day advance in more than 11 years amid prospects that China and the USA are working toward a possible deal in a trade war that has roiled global financial markets.
"The economic teams of the two countries should strengthen contact, conduct consultations on issues of mutual concern, and push for a mutually acceptable solution to China-US economic and trade issues", Xi said.
Bloomberg reported on Monday that the United States is preparing to announce tariffs on all remaining Chinese imports by early December if talks next month between presidents Donald Trump and Xi Jinping fail to ease the trade war.
The two countries have been locked in an escalating trade battle, with each side imposing tariffs on billions of dollars worth of imports from each side.
Tennessee Senator Lamar Alexander told the official the US and China are competitors not adversaries and suggested they can prosper together.
Just after the upbeat readouts of the Trump-Xi call, the Justice Department announced the latest in a long list of actions against what Trump administration calls China's cheating through intellectual property theft, unfair corporate subsidies and rules hampering United States corporations in China.
Alexander said he would be discussing trade with Li, though neither of them mentioned the ongoing tariff war in remarks in front of reporters.
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