Asian shares ease as investors await progress in US-China trade talks

Asian stock markets were in a cautious mood on Thursday as investors hung on for any hint of progress in the latest Sino-U.S. tariff talks, though China trade data handily beat expectations in a welcome relief for the global economy. Beijing reported exports rose 9.1 percent in January on a year earlier, confounding forecasts of a fall, while imports dipped by a surprisingly slight 1.5 percent.

As a result China's trade surplus also topped forecasts while imports from the U.S. plunged 41 percent, which might not please the White House. With Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in China for high level talks, investors had been daring to hope for good news. U.S. President Donald Trump said on Wednesday the talks were "going along very well" as they try to resolve the dispute ahead of a March 1 deadline. The reaction in share markets was guarded with Shanghai blue chips down 0.2 percent, having jumped 2 percent on Wednesday to levels last seen in late September.

MSCI's broadest index of Asia-Pacific shares outside Japan eased 0.3 percent, though that was off a peak last seen in early October. Japan's Nikkei edged up 0.05 percent to its highest for the year so far as a weakening yen boosted export stocks. E-Mini futures for the S&P 500 added 0.02 percent.

There was some hope another U.S. government shutdown would be averted as Trump edged toward backing a deal in Congress on funding for a border barrier. Data showing U.S. consumer price inflation rose at the slowest annual pace in more than 1-1/2 years also supported speculation the Federal Reserve could stay patient on rates and helped lift Wall Street. The Dow ended Wednesday up 0.36 percent, while the S&P 500 gained 0.30 percent and the Nasdaq 0.26 percent.

DOLLAR BEST OF BAD BUNCH

In currency markets, the improvement in risk appetite undermined the safe haven yen and propelled the dollar to its best levels of the year so far at 111.04. The euro took a hit of its own from dire data on European industrial output which pushed long-term market inflation expectations to new lows, while putting downward pressure on bond yields in the bloc. The single currency was last at $1.1275 and above the floor of a $1.1213/1.1570 trading range that has held since mid-October. Sterling was also on edge at $1.1856 ahead of another parliamentary vote on British Prime Minister Theresa May's Brexit plan.

All of which left the dollar near its highest since mid-December on a basket of currencies at 97.089. In commodity markets, spot gold edged up 0.18 percent to $1,308.56 per ounce. Oil prices found support as top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production. U.S. crude was last up 14 cents at $54.04 a barrel, while Brent crude futures rose 15 cents to $63.76.

(With inputs from agencies.)