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Japanese shares settle higher on U.S.-China trade deal optimism, weaker yen

TOKYO, Jan 14 (Reuters) - Japanese shares rose to four-week closing highs on Tuesday as markets resumed trading after a long weekend, with signs of goodwill between Beijing and Washington supporting risk assets ahead of the expected signing of a Phase 1 U.S.-China trade deal.

The Nikkei share average advanced 0.7% to 24,025.17, its highest close since Dec. 17, while the broader Topix added 0.3% to 1,740.53, also its four-week high.

The U.S. Treasury Department on Monday said China should no longer be designated a currency manipulator - a label it applied as the yuan slid in August.

The yen plumbed a near eight-month low versus the dollar of 110.22 yen, providing a tailwind for Japanese exporters as a weak local currency boosts corporate profits when they are repatriated, while the yuan climbed to its highest since July.

The announcement came as a high-level Chinese delegation arrived in Washington ahead of the signing of trade agreement on Wednesday aimed at easing tensions between the two countries.

Tokyo-listed blue-chip exporters Sony Corp climbed 2.5%, Panasonic Corp rose 1.7% and Tokyo Electron added 1.9%.

Among other gainers, SoftBank Group Corp and Fast Retailing, the Nikkei’s top two heavyweights, rose 3.5% and 2.2%, respectively, on futures buying.

Aeon advanced 2.6% after the retail giant announced the first change in its top leadership in 23 years.

Bucking the overall trend, Nissan Motor shed 3% to hit its lowest level in 8-1/2-years, a day after Renault shares hit six-year lows on worries that the French group’s 20-year cost-sharing alliance with Nissan was headed for a break-up without Carlos Ghosn.

Elsewhere, Ryohin Keikaku dived 19% after the operator of Muji stores forecast its net profit for the financial year ending February to fall 25.8%, worse than expected.

“The market is now waiting for a new catalyst, other than an expected Phase 1 U.S.-China trade deal, which has already been priced in,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui DS Asset Management. (Reporting By Tomo Uetake; Editing by Subhranshu Sahu)