Hint of Improvising negotiations with US led Chinese stocks hit high since Mar 2018

China stocks on Wednesday closed at their highest levels since March 2018, aided by more evidence of economic recovery and signs of progress in U.S.-China trade talks.

The blue-chip CSI300 index rose 1.3 per cent, to 4,022.16 points, while the Shanghai Composite Index closed up 1.2 per cent at 3,216.30 points. Both indexes ended at their highest levels since late March 2018.

Activity in China's services sector picked up to a 14-month high in March as demand improved at home and abroad, a private business survey showed on Wednesday, adding to signs that government stimulus policies are gradually kicking in. The findings were largely in line with those of an official gauge on the non-manufacturing sector released on Sunday, which showed services activity picked up in March as new orders rose more quickly. Construction, in particular, showed strength, likely reflecting government efforts to fast-track more infrastructure projects to kindle domestic demand.

China's central bank is expected to cut banks' cash reserve requirements again soon to bolster financial system liquidity as it looks to support the slowing economy, analysts said, as market speculation over another policy move grows. Investors also cheered the progress in Sino-U.S. trade talks.

The United States and China "expect to make more headway" in trade talks this week, White House economic adviser Larry Kudlow said on Tuesday. "Recent positives such as the U.S. Federal Reserve pausing their interest rate increases, incremental signs of progress on China-U.S. trade negotiations and a dovish bias from China's PBoC to support growth have given investors a sunnier attitude about risk assets," said Tai Hui, chief market strategist, Asia Pacific, J.P. Morgan Asset Management.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.93 per cent, while Japan's Nikkei index closed up 0.97 per cent. At 07:14 GMT, the yuan was quoted at 6.7089 per U.S. dollar, 0.2 per cent firmer than the previous close of 6.7225.

So far this year, the Shanghai stock index is up 29 per cent and the CSI300 has risen 33.6 per cent, while China's H-share index listed in Hong Kong is up 15.4 per cent. Shanghai stocks have risen 4.06 per cent this month. ** About 43.05 billion shares were traded on the Shanghai exchange, roughly 104.4 per cent of the market's 30-day moving average of 41.24 billion shares a day. The volume in the previous trading session was 44.71 billion.

As of 07:15 GMT, China's A-shares were trading at a premium of 25.26 per cent over the Hong Kong-listed H-shares.