Asia markets mostly up on hopes for crunch Trump-Xi trade talks

Wall Street provided a positive lead following soothing comments from top White House economic advisor Larry Kudlow on the chances of a trade deal when the leaders of the world's top two economies meet Saturday.

"The president said there's a good possibility we can make a deal and he's open to it but certain conditions have to be met, certain things have to be changed," Kudlow told a White House briefing.

The remarks came a day after Trump warned that if he cannot reach a deal with Xi he expects to increase tariffs on $250 billion of Chinese goods and impose levies on all the other goods the US imports from the country.

While observers do not expect a wide-ranging deal to be made at the meeting, which takes place on the sidelines of a G20 summit in Buenos Aires, there is the possibility of an agreement that will allow the two to reach a consensus down the line.

"It will depend a lot about the kind of comments that will come out after the meeting," Massimiliano Bondurri, founder and chief executive officer of SGMC Capital in Singapore, told Bloomberg TV.

"We don't expect anything saying a deal will never be found, we expect some formal comments will be made as in discussions will be ongoing, but we haven't found any agreement as of yet, so that's likely to weigh on the risk sentiment on global markets."

Hong Kong jumped 1.3 percent in the afternoon and Shanghai closed 1.1 percent higher with Tokyo climbing one percent.

Singapore added 0.3 percent, Seoul was up 0.4 percent and Taipei rallied 1.1 percent, while Wellington, Mumbai and Bangkok were all higher. Sydney was marginally lower.

- Warning of failure -

However, Eli Lee, head of investment strategy at the Bank of Singapore, warned that failure to reach an agreement this weekend would spell trouble.

"Given that the markets are pricing in some likelihood of a ceasefire or resolution, a no-deal scenario will cause a negative knee-jerk reaction for risk assets," he said in a report.

"The prospects of further trade escalation and disruptive second-order effects will exacerbate growth fears and drive further asset de-rating, particularly for Asian equities."

Also on the radar is a speech later in the day by Fed boss Jerome Powell, which comes a day after Vice Chairman Richard Clarida hinted at a more cautious approach.

While the bank is expected to lift rates next month, traders will be looking to see if Powell indicates a slowing of its pace of hikes in light of softer readings at home and signs of global weakening.

Expectations that rates would continue to rise through to 2020 -- making it more expensive to borrow for investing -- have weighed on global markets this year.

Powell's speech also comes a day after Trump said he was "way off base" for continuing with his tightening policy.

"I'm doing deals and I'm not being accommodated by the Fed," Trump told the Washington Post in his latest swipe at the central bank boss he handpicked for the job. Powell has dismissed similar attacks from the White House in the past.

In foreign exchanges the pound edged up a day after tumbling on Trump's warning that Theresa May's EU divorce deal could damage her chances of striking a post-Brexit trade agreement with the US.

The British prime minister, who has embarked on a nationwide drive to lobby the public, is also facing an uphill struggle to get her plan through parliament, which is mostly opposed to it. A vote is slated to take place on December 11.

Key figures around 0710 GMT

Tokyo - Nikkei 225: UP 1.0 percent at 22,177.02 (close)

Hong Kong - Hang Seng: UP 1.3 percent at 26,663.48

Shanghai - Composite: UP 1.1 percent at 2,601.74 (close)

Pound/dollar: UP at $1.2758 from $1.2729 at 2140 GMT

Euro/pound: DOWN at 88.55 pence from 88.71 pence

Euro/dollar: DOWN at $1.1297 from $1.1293

Dollar/yen: UP at 113.85 yen from 113.79

Oil - West Texas Intermediate: UP 79 cents at $52.35 per barrel

Oil - Brent Crude: UP 96 cents at $61.17 per barrel

New York - Dow Jones: UP 0.4 percent at 24,748.73 (close)

London - FTSE 100: DOWN 0.3 percent at 7,016.85 (close).