Asia stocks opened sharply lower on Thursday, joining a global sell-off on concerns over Turkey’s financial crisis but later pared losses on news that China and the US 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 was off by 1.17 percent after another day of volatile trading driven by Turkey.
On Wednesday, Ankara hiked tariffs on imports of several US goods in retaliation for 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.
A bearish mood saw European markets close down nearly two percent and the broad US S & P 500 market off by nearly one percent.
However, 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.
And equities in Asia staged a fightback after news hit the wires of upcoming talks between the US and China, currently embroiled in a trade spat that economists warn could harm the global economy.
China’s Vice Commerce Minister Wang Shouwen, the deputy representative on international trade negotiations, will meet with a senior US treasury official, David Malpass, at the invitation of the United States, 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.
The two countries 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,” he told AFP.
A few hours into the trading session, the Nikkei was back in positive territory while markets in China and Hong Kong had almost erased all of their losses.
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