Asian markets mostly rise ahead of Trump-Xi, oil extends gains

Energy firms enjoyed gains after a rally in oil prices, while high-yielding and emerging market currencies continued Thursday's advances against the dollar as the Federal Reserve shows signs it will slow down its pace of interest rate hikes.

While the outcome of Saturday's crunch talks between Trump and Xi hangs in the balance, there are hopes the heads of the world's top two economies can find a way to ease their trade row that has seen them exchange deep import tariffs.

Ahead of the leaders' arrival in Buenos Aires late Thursday for the G20 meeting, there have been conflicting messages coming out of Washington about the chances of a breakthrough, with most observers saying they do not expect any major announcements.

"I wouldn't be surprised at the end of this weekend if the US and China didn't announce a concord that basically set down a path to help resolve the trade frictions," Scott Minerd, chief investment officer at Guggenheim Partners, told Bloomberg TV.

"I don't think that out of the meeting there's going to come much substance, but there will be a sort of set of principles that will be established to start the process of bringing an end to the trade war."

On Asian equity markets Tokyo closed up 0.4 percent, Hong Kong added 0.5 percent, while Shanghai finished 0.8 percent higher, with dealers poring over data showing Chinese manufacturing stalled in November as the effects of Trump's multi-billion-dollar tariffs begin to bite.

Singapore gained 0.5 percent, while Wellington, Taipei and Mumbai also chalked up gains.

However, Seoul was off 0.8 percent after the South Korean central bank lifted borrowing costs for the first time in a year, while Sydney shed 1.6 percent.

OPEC meeting up next

Past the G20 meeting, traders are looking to the following weekend's gathering of OPEC and non-OPEC oil producers, where Saudi Arabia and others are expected to cut output in a bid to support prices.

Crude edged up Friday, a day after enjoying a much-needed rally on a report that Russia will join in the reduction, providing a boost to regional energy firms.

"If a meaningful deal is reached between OPEC and Russia to tackle glut problems, we can probably expect a meaningful rebound in energy prices," said Margaret Yan Yang, market analyst with CMC Markets Singapore.

However, others pointed out that no one knows how much and for how long the output cuts will be, while at the same time the US continues to ramp up production.

Stephen Innes, head of Asia-Pacific trade at OANDA, added: "With traders already anticipating a one million barrels per day cut, which is arguably priced in, it will probably take a much deeper cut to jolt the market into a short covering rally.

"Otherwise, the market falls prey to the prevailing bearish sentiment that will continue to drive prices lower on the premise the reduction might not be sufficient enough to draw down surplus supplies."

On currency markets the dollar fell further after minutes from the Fed's last policy meeting suggesting concern about pressing on with its current pace of rate hikes. They come after the head of the central bank hinted at a softer policy, sending the greenback lower.

On Friday it was down against units that have been beaten down this year on expectations for more Fed rate hikes. Indonesia's rupiah and the Indian rupee were sharply higher, while the South African rand and Chinese yuan were also enjoying buying interest.

Key figures around 0710 GMT

Tokyo - Nikkei 225: UP 0.4 percent at 22,351.06 (close)

Hong Kong - Hang Seng: UP 0.5 percent at 26,582.32

Shanghai - Composite: UP 0.8 percent at 2,588.19 (close)

Pound/dollar: UP at $1.2790 from $1.2783 at 2200 GMT

Euro/dollar: UP at $1.1396 from $1.1387

Dollar/yen: DOWN at 113.40 yen from 113.45 yen

Oil - West Texas Intermediate: UP eight cents at $51.53 per barrel

Oil - Brent Crude: UP 21 cents at $59.72 per barrel

New York - Dow Jones: DOWN 0.1 percent at 25,338.84 (close)

London - FTSE 100: UP 0.5 percent at 7,038.95 (close)