September 13, 2018 / 2:44 AM / a month ago

China's yuan, stocks cheer prospect of fresh U.S. trade talks

SHANGHAI, Sept 13 (Reuters) - China’s yuan jumped on Thursday and stocks rose after the Trump administration invited Chinese officials to restart trade talks, offering hope for a possible easing of the bitter trade war between the world’s two largest economies.

The yuan opened at a near one-week high against the U.S. dollar, supported as well by a firmer official yuan midpoint setting by the central bank.

China’s benchmark stock indexes jumped over 1 percent at one point but quickly pared gains.

The benchmark Shanghai Composite index was up 0.4 percent by mid-morning, after ending at its lowest close since January 2016 on Wednesday as investors braced for the activation of more U.S. tariffs.

The blue-chip CSI300 index also was up 0.4 percent, supported by gains in real estate and computer firms.

In Hong Kong, Chinese H-shares rose 1.9 percent, while the Hang Seng Index was up 1.6 percent.

The Trump administration has invited Chinese officials to restart trade talks, the White House’s top economic adviser said on Wednesday, as Washington prepares to escalate the U.S.-China trade war with tariffs on $200 billion worth of Chinese goods.

“There’s some discussions and information that we received that the Chinese government – the top of the Chinese government wished to pursue talks,” Larry Kudlow said, adding U.S. Treasury Secretary Steven Mnuchin has apparently issued an invitation.

News of a fresh round of talks supported the yuan and pressured the dollar, though few market watchers were optimistic of a breakthrough after several earlier meetings made little headway.

“While we agree this should provide short term relief, the road ahead can still be tricky,” Tai Hui, chief market strategist for JP Morgan Asset Management, said in a morning note.

“China did provide concessions earlier in the year to buy more U.S. products and reduce the bilateral deficit as well as opening up markets to foreign companies. If this did not satisfy the US six months ago, China may not be able to offer much more than that, especially if this involves adjusting its Made in China 2025 policy.”

Prior to market opening on Thursday, the People’s Bank of China (PBOC) set the midpoint of the currency’s daily trading band at 6.8488 per dollar.

That was 58 pips firmer than the previous fix of 6.8546, and largely in line with market forecasts, traders said.

In the spot market, the onshore yuan opened at 6.8327 per dollar, its strongest level since Sept. 7. At 0148 GMT the yuan was trading hands at 6.8445 per dollar. (Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim Coghill)

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