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GLOBAL MARKETS – Asia shares rally for 4-1 / 2-month peak of hopes of trade between the US and China



* Ex-Japan Asia MSCI increased 1% to highest since early October

* Investors expect US, China to reach trade deal next month

* Fed minutes & nbsp; 29 / 30 political meeting in focus

* Asian stock markets: tmsnrt.rs/2zpUAr4

By Hideyuki Sano

TOKYO, February 20 (Reuters) – Asian equities developed into 4-1 / 2 month highs on Wednesday as investors are striving to allow Chinese and US trade dealers to secure an agreement to de-escalate their year-long customs war.

MSCI's widest Asia-Pacific stock index outside Japan rose nearly 1.0 percent to reach its highest level since October 2.

Hong Kong's Hang Seng rose 1.1 percent to six-month highs, while Korea's Kospi and Taiwan's index recovered to levels last seen in early October. Japan's Nikkei got 0.75 percent to two-month highs.

Chinese stocks increased 0.4 percent and extended their winnings to 1

8 percent from their January 4 trough thanks to the influx of foreign funds.

The gains in Asia peaked in Tuesday's Wall Street session, where S & P 500 gained 0.15 percent, aided by optimistic results from Walmart. Nasdaq rose 0.19 percent and logged its seventh straight session of winnings.

U.S. President Donald Trump said Tuesday that trade negotiations with China went well and suggested that he be open to pushing the deadline to end the negotiations, saying that March 1 was not a "magical" date.

U.S. Tariffs of DKK 200 billion USD of Chinese imports is now expected to rise to 25 percent from 10 percent if no agreement is reached by March 1.

Investors now expect Trump to meet Chinese President Xi Jinping next month, probably after China's annual congressional meeting of March 5, to enter into an agreement or secure a "memorandum of understanding."

"They are likely to agree that China is importing a larger quantity of natural gas and agricultural products," says Nobuhiko Kuramochi, chief strategist at Mizuho Securities, adding that China will also "open up some of its domestic financial services and possibly some manufacturing sectors. ".

But he predicted China "will not come down to so-called structural problems. The two countries may agree to set up a body to continue discussing these issues. Markets are already in the midst of pricing in these things."

The two countries launched a new round of negotiations to resolve their trade war on Tuesday, and higher-level sessions are scheduled later this week with Chinese Vice President Liu Han visiting Washington on Thursday and Friday.

NOTE FAT TURNAROUND

Investors also look at the release later Wednesday in minutes from the Federal Reserve's political meeting, where politicians signaled that there were no further rate hikes and possible tweaks to its balance normalization .

New York Fed President John Williams told Reuters that he was satisfied with the level of US interest rates now and he sees no reason to raise them again unless economic growth or inflation changes to an unexpectedly higher gear.

But he also suggested that the balance would continue at least for next year at its current pace, which dampened speculation that the Fed could end the process this year.

In the foreign exchange market, the euro plummeted to $ 1.1350, which jumped back from Friday's three-month low of $ 1.134, at the back of improving appetite risk. The dollar rose 0.2 percent to 110.80 yen, edging close to Thursday's seven-week peak at 111.13.

The British pound rose to $ 1.3063 on Tuesday and gained 1.09 percent, one step some traders are encouraged to raise hopes Prime Minister Theresa May will make progress in seeking changes to her Brexit agreement with the EU. It lasted at $ 1.3070.

The Chinese yuan increased by more than 0.5 percent to 6.7243 per. Dollar, the highest level in about three weeks after Bloomberg reported Tuesday that the United States was trying to secure a promise from China that it would not devalue its yuan currency as part of a trade deal.

The Yuan's strength also triggered bid for Asian currencies, as the Thai Baht hit five-year highs.

Oil prices hovered near 2019 heights, backed by OPEC-led supply cuts and US sanctions against Iran and Venezuela, but additional gains were covered by strong US production and expectations of a recession.

U.S. West Texas Intermediate (WTI) crude oil futures were $ 56.01 a. Barrel, down 8 cents from their final settlement, but not far from their 2019 high of $ 56.33 reached earlier this week.

International Brent Raw Futures stood at $ 66.33 per dollar. Barrel that hit a three-month high of $ 66.83 per barrel Barrel earlier in the week.

Gold rose 0.4 percent to 10-month highs of $ 1,346.50, which prolonged its rally shown partly by signs that world central banks are being lazy.

The yellow metal has also attracted security burdens on concerns over Brexit, said Tatsufumi Okoshi, senior trading economist at Nomura Securities.

Palladium rose 1.4%. For another record high, which has risen by about 19 percent so far this year on expectations of increased demand due to stricter emission standards. (Editing by Richard Borsuk & Shri Navaratnam)

Our Standards: Thomson Reuters Trust Principles.

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