China blue-chip index slips from 2-year high on profit-taking

China stocks shed early gains on Tuesday as investors booked profits from the rally underpinned by optimism ahead of the signing of Phase 1 trade deal between Washington and Beijing. ** The blue-chip CSI300 index rose as much as 0.5% to a near two-year high before ending 0.3% lower at 4,189.89. The Shanghai Composite Index eased 0.3% to 3,106.82.

** The CSI300 index climbed 7% in December and has gained 2.3% so far this year. ** The stock market had been performing quite well recently, though it now faces pressure of a correction with expectations of the Sino-U.S. trade deal gradually factored in, analysts at China Galaxy Securities said in report.

** The U.S. Treasury Department on Monday dropped its designation of China as a currency manipulator, days before top officials of the world's two largest economies were due to sign a preliminary trade agreement to ease an 18-month-old tariff war. ** China has pledged to buy nearly an additional $80 billion of manufactured goods from the United States over the next two years, plus over $50 billion more in energy supplies, according to a source briefed on a trade deal to be signed on Wednesday.

** China's exports rose for the first time in five months in December and by more than expected, though the market reaction to the data was muted as signs of a modest recovery in the world's second-largest economy have been widely noted and behind the recent strong rally in the A-share market. ** Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.11%, while Japan's Nikkei index closed up 0.73%.

** By 0720 GMT, the yuan was quoted at 6.8865 per U.S. dollar, 0.09% firmer than the previous close of 6.8925. ** By 0721 GMT, China's A-shares were trading at a premium of 27.31% over the Hong Kong-listed H-shares.