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Asian Shares Rally As U.S.-China Trade Tensions Ease

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Asian stocks rallied on Monday after U.S. President Donald Trump and Chinese President Xi Jinping agreed to a 90-day truce on their escalating trade war.

While Trump agreed to hold off on his threat to raise tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent on January 1st, Beijing agreed to buy very substantial amounts of agricultural, energy, industrial and other products from the U.S. to narrow its trade gap with the U.S.

China's Shanghai Composite Index soared 2.6 percent to finish at 2,654.80, while Hong Kong's Hang Seng Index surged up 2.6 percent to 27,182.04.

Japanese shares hit a six-week high despite the dollar retreating to the mid-113 yen range on expectations of a slower pace of U.S. rate hikes and ahead of Federal Reserve Chairman Jerome Powell's testimony before a congressional Joint Economic Committee this week.

The Nikkei 225 Index advanced 1 percent to 22,574.76, the highest closing level since October 22nd, while the broader Topix Index jumped 1.3 percent to close at 1,689.05.

Exporters Canon, Panasonic, Toyota Motor and Sony climbed 2-3 percent, and top banks Mitsubishi UFJ Financial and Sumitomo Mitsui Financial ended modestly higher. In the tech sector, Advantest gained 1.6 percent, Tokyo Electron added 0.9 percent and Screen Holdings spiked 6.3 percent.

On the economic front, the Japanese manufacturing sector continued to expand in November, albeit at a slower pace, the latest survey from Nikkei revealed with a manufacturing PMI score of 52.2, down from 52.9 in October.

Separately, a government report showed that capital spending in Japan rose 4.5 percent sequentially in the third quarter of 2018, shy of expectations for an increase of 8.5 percent and down from 12.8 percent in the three months prior.

Australian stocks rose across the broad on improved risk sentiment amid the de-escalation in tensions between the U.S. and China, Australia's biggest trade partner. The benchmark S&P/ASX 200 Index shot up 1.8 percent to 5,771.20, while the broader All Ordinaries Index ended 1.9 percent higher at 5,856.30.

Miners BHP, Rio Tinto and Fortescue Metals Group climbed 2-4 percent, and BlueScope Steel soared 11.8 percent on share buyback news.

Woodside Petroleum, Oil Search, Santos and Origin Energy jumped 4-9 percent as oil prices surged up around 5 percent amid the U.S.-China trade truce.

The big four banks ended on a mixed note as the royal commission ended its final round of public hearings.

Shares of GrainCorp spiked 26.7 percent after the agribusiness and food ingredients company announced it has received an unsolicited A$2.4 billion takeover offer from Long-Term Asset Partners.

On the economic front, data on building approvals, company operating profits and manufacturing activity painted a mixed picture of the economy.

South Korean stocks hit a six-week high as easing trade tensions helped investors shrug off disappointing manufacturing data. According to the latest survey from Nikkei, the manufacturing PMI dropped to 48.6 from 51.0 in October.

The benchmark Kospi rallied 1.7 percent to finish at 2,131.93, the highest level since October 22nd. Tech heavyweight Samsung Electronics climbed 3.4 percent, automaker Hyundai Motor rose 1.4 percent and oil refiner SK Innovation advanced 3.6 percent.

New Zealand's benchmark S&P/NZX-50 Index rose 0.6 percent to 8,876.09, led by financials. The country's terms of trade fell a seasonally adjusted 0.3 percent sequentially in the third quarter of 2018, Statistics New Zealand said in a report. That followed the downwardly revised 0.4 percent increase in the three months prior.

Malaysia's KLSE Composite Index was up 1.2 percent and the Taiwan Weighted added 2.5 percent. The manufacturing sectors in Taiwan and Malaysia contracted at a faster rate in November, the latest surveys from Nikkei revealed. Indian shares were marginally lower, with weak data and the surge in oil prices keeping investors cautious.

The major U.S averages rose around 0.8 percent on Friday as investors cheered optimistic comments from President Donald Trump and Chinese President Xi Jinping on trade ahead of the crucial G20 meeting.

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