Chinese stocks jump on trade talk optimism ahead of Lunar New Year

Chinese shares rose ahead of the week-long Lunar New Year holidays, as Beijing and Washington progressed with trade negotiations, with investors shaking off worries about a further economic slowdown for now. At the close, the Shanghai Composite index was up 1.3 per cent at 2,618.23. On a weekly basis, it ended 0.6 per cent higher this week.

The blue-chip CSI300 index was up 1.4 percent on Friday, climbing almost 2 percent week-on-week. CSI300's financial sector sub-index higher by 0.6 per cent, the consumer staples sector up 1.3 per cent, and healthcare shares rose 3.7 per cent. The smaller Shenzhen index jumped 2.8 per cent and the start-up board ChiNext Composite index rallied 3.5 per cent.

U.S. President Donald Trump said on Thursday he will meet with Chinese President Xi Jinping soon to try to seal a comprehensive trade deal, noting that Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin were invited to bring the U.S. negotiating team to Beijing around mid-February. The two leaders met in Argentina in early December and agreed to a 90-day truce in the trade war.

The comment came after the latest round of Sino-U.S. trade talks in Washington, and a meeting between Trump and Liu He, Chinese vice premier. The Chinese delegation said in a statement that the two days of high-level talks made "important progress," official Xinhua news agency reported. China's factory activity shrank by the most in almost three years in January as new orders slumped further and output fell, a private survey showed.

The gloomy readings were more downbeat than an official survey on Thursday, which also showed growing strains on China's manufacturing sector, a key source of growth and jobs. But progress in the trade talk was enough to offset worries about factory activity falling further, said Cao Xuefeng, head of research at Chengdu-based Huaxi Securities. This week's data "was somewhat affected by the Sino-U.S. trade war," he said.

Around the region, MSCI's Asia ex-Japan stock index was weaker by almost 0.1 per cent, while Japan's Nikkei index closed up 0.1 per cent. The largest percentage gainers on the main Shanghai Composite index were shares of EGing Photovoltaic Technology Co Ltd, up 10.2 per cent, followed by Beijing Jingyuntong Technology Co Ltd, gaining 10.1 per cent and Shanghai Daimay Automotive Interior Co Ltd, up by 10 per cent.

The largest percentage losers on the Shanghai index were shares of Dasheng Times Cultural Investment Co Ltd and Zhejiang Kanglongda Special Protection Technology Co Ltd, both down 10.01 per cent, followed by Y.U.D. Yangtze River Investment Industry Co Ltd, down by 9.9 per cent. The Shanghai stock index is up 5 per cent so far this year, while the CSI300 has risen 7.9 per cent.

About 13.2 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 15.4 billion. As of 07:50 GMT, China's A-shares were trading at a premium of 16.82 per cent over the Hong Kong-listed H-shares. ** The Shanghai stock index is above its 50-day moving average and below its 200-day moving average.