China stocks rise ahead of likely Fed rate cut; trade talks in focus

China stocks rose on Wednesday on expectations of lower borrowing costs at home and the United States, with a resumption of trade talks between Beijing and Washington aiding risk appetite. China's blue-chip CSI300 index gained 0.5% to 3,910.08, while the Shanghai Composite Index rose 0.3% to 2,985.65860. The U.S. Federal Reserve is widely expected to lower key borrowing costs by 25 basis points later on Wednesday. Although the People's Bank of China (PBOC) kept the rate unchanged on one-year loans from its medium-term lending facility (MLF) on Tuesday, analysts still expect banks to set Loan Prime Rates (LPRs) lower at Friday's monthly fixing.

A cut in LPRs - China's benchmark rates for new loans - could lead to lower borrowing costs for consumers and companies in a slowing economy. Investors are also closely monitoring developments in the U.S.-China trade talks. U.S. and Chinese deputy trade negotiators are due to meet in Washington this week, to pave the way for high-level talks in early October.

U.S. President Donald Trump said on Tuesday his administration could seal a deal on trade with China before the U.S. presidential election, or an agreement could be reached the day after voters go to the polls. Consumer and healthcare stocks led the gains in China, while telecommunications and energy stocks fell.

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