Chinese and Hong Kong stocks gain ahead of Sino-US trade talks
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US-China talks expected to mend rifts
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Rare earths sector jumps as likely focus in negotiations
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Tech shares in HK enter bull market
Hong Kong, - Chinese and Hong Kong stocks edged higher on Monday, led by the rare earth and technology sectors, as investors awaited high-level U.S.-China trade negotiations in London.
Investors were cautiously positive as the world's two largest economies seek to defuse their trade dispute, with China grappling with slow exports and deflation while the U.S. faces eroding confidence in its assets and economy.
U.S. Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer will meet China's Vice Premier He Lifeng in the first meeting under the two countries' economic and trade consultation mechanism.
China's blue-chip CSI300 Index closed up 0.3% and the Shanghai Composite Index ended 0.4% higher. Hong Kong's benchmark Hang Seng advanced 1.6% to the highest level since March 21.
The offshore yuan struggled for direction and was last traded at 7.1852 per dollar.
Monday's meeting follows a rare leader-to-leader call between Chinese leader Xi Jinping and U.S. President Donald Trump on Thursday after tensions flared up again, with both sides accusing the other of violating a deal agreed last month.
The two sides agreed a 90-day pause and a sharp reduction in tariffs after talks in Geneva in early May, which left U.S. tariffs on Chinese goods at 30% from May 14 to August 12 and Chinese duties on U.S. imports at 10%. That brought temporary relief from a trade war that could bring $600 billion in two-way trade to a standstill, disrupting supply chains and impacting the global economy.
"We think there could be some favourable outcomes from the meeting as Trump has hinted some positive signs," analysts at China Securities said in a note, adding that any progress would offer markets some relief.
Leading onshore markets higher on Monday, the strategically-important rare earths sector - expected to be a key focus of the talks - advanced 2.4% onshore in its best single-day performance in over a month.
Technology shares led Hong Kong markets higher, with the Hang Seng Tech Index rising 2.8% to a one-month high. The subindex has gained over 20% since its April low, entering a technical bull market.
Chinese stocks have been struggling for direction since April 2, when Trump announced sweeping "reciprocal" tariffs that threatened to upend the global trade order.
The CSI300 Index onshore has barely budged from the April 2 level, and the Hang Seng has gained around 4% during the period, both lagging the recovery among major global markets.
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