TOKYO: Asia stocks closed lower Thursday, joining a global sell-off on concerns over Turkey’s financial crisis, although losses were capped by news that China and the United States would hold trade talks.
Equities across the region suffered steep losses at the opening bell, with Tokyo and Shanghai off by more than one percent, dragged down by a weak session on Wall Street as traders fretted over possible contagion from Turkey’s currency crisis.
Japan’s main Nikkei 225 index shed 1.20 percent in early trade and China’s benchmark Shanghai Composite opened weaker by 1.17 percent after another day of volatile trading driven by Turkey.
But surprising news that the world’s top two economies would hold talks in a bid to bury the trade hatchet dented investors’ pessimism and even pushed some Asian markets into the green.
China’s Vice Commerce Minister Wang Shouwen, the deputy representative on international trade negotiations, will meet senior US treasury official David Malpass at Washington’s invitation, the ministry in Beijing said in a statement.
Traders saw a glimmer of hope of a detente in the ongoing trade battle that has seen the two sides hit each other with reciprocal tariffs on goods worth $34 billion, with much more threatened.
Washington and Beijing plan to launch a new round of tariffs on $16 billion worth of goods from each country on August 23.
“It is hard to tell how the talks will go but it’s a positive signal that the two countries are looking for some compromise plan,” said Makoto Sengoku, market analyst at Tokai Tokyo Research Institute.
“If they were determined to fight it out, they wouldn’t meet.”
After a see-saw session, the Nikkei 225 closed down 0.05 percent to end at 22,192.04 while the wider Topix index was down slightly more, losing 0.64 percent.
Hong Kong closed down 0.8 percent while Shanghai was 0.7 percent lower.
European shares meanwhile opened higher, with markets in London, Frankfurt and Paris all up by around 0.3 percent at the bell.
Despite the positive news of US-China talks, however, nervousness over the Turkish currency crisis lingered in the background and kept bulls on the back foot.
On Wednesday, Ankara hiked tariffs on imports of several US goods in retaliation to American sanctions, the latest step in a tit-for-tat spat between the two NATO allies that shows little sign of easing.
The crisis has sent the Turkish currency into free fall and sparked concerns that European banks and other emerging markets exposed to the unit could also suffer.
Nevertheless, the lira managed to claw back some ground after losing just under a quarter of its value on Friday and Monday, a loss that had prompted fears of a fully-fledged economic crisis in the critical emerging economy.
At the European open, the lira was trading around 5.81 to the dollar, gaining throughout the trading day and considerably stronger than at the start of the week when it dropped below the psychologically important seven marks.
Key figures around 0830 GMT
Dollar/Turkish lira: DOWN at 5.81 lira from 5.82
Euro/dollar: DOWN at $1.1374 from $1.1384
Pound/dollar: DOWN at $1.2705 from $1.2724
Dollar/yen: DOWN at 110.77 from 110.84 yen
Tokyo – Nikkei 225: DOWN 0.05 percent at 22,192.04 (close)
Hong Kong – Hang Seng: DOWN 0.8 percent at 27,100.06 (close)
Shanghai – Composite: DOWN 0.7 percent at 2,705.19 (close)
Oil – Brent Crude: DOWN 5 cents at $71.08 per barrel
Oil – West Texas Intermediate: DOWN 7 cents at $65.10 per barrel
New York – Dow Jones: DOWN 0.5 percent at 25,162.41 (close)
London – FTSE 100: UP 0.3 percent at 7,521.53 points (open)
Frankfurt – DAX 30: UP 0.3 percent to 12,202.13 points (open)
Paris – CAC 40: UP 0.4 percent to 5,326.17 (open)