TOKYO (BLOOMBERG) - Asian stocks slipped on Tuesday (Dec 4), signalling fading investor applause for the US-China trade truce.

In the United States treasury market, a portion of the yield curve inverted for the first time in more than a decade.

Three-year yields climbed above five-year ones, showing that traders are pricing in the end of the Federal Reserve's interest-rate hike campaign. Ten-year yields steadied below 3 per cent.

Stocks in Japan, Korea and Australia posted modest losses while Hong Kong futures pointed lower. Earlier, the S&P 500 Index closed higher on the trade news, while the US dollar weakened and oil gained.

The MSCI Asia Pacific Index fell 0.1 per cent at 9:05am Tokyo time. Japan's Topix Index fell 0.2 per cent while Australia's S&P/ASX 200 declined 0.2 per cent.

Hang Seng futures fell 0.6 per cent overnight.

On Monday, the S&P 500 gained 1.1 per cent while the Nasdaq Composite Index rose 1.5 per cent.

Investors are mulling the prospects for a year-end equity rally, with prospects for renewed US-China trade talks calming tensions after a tumultuous period for risk assets. Treasury Secretary Steven Mnuchin said he is hopeful for a "real agreement" that includes structural changes in China's economic policies, while White House economic adviser Larry Kudlow said the two countries are "pretty close" to an agreement on stopping intellectual property theft.

"It's easy to see the trade deal as a half empty - that it is just a postponement and that they will work together but that there really isn't any kind of resolution," said Mr Jeff Kleintop, chief global investment strategist at Schwab Centre for Financial Research. "But I think you can see it as a half glass full. "

Concerns remain about the impact of Fed tightening against a backdrop of slowing global growth. While the more closely watched part of the yield curve - the gap between two-year and 10-year yields - remains upwardly sloped, it flattened to just 15 basis points on Monday. With yield-curve inversions having been a reliable indicator of past recessions, the move casts a shadow over the outlook for 2019.

Elsewhere, oil extended Monday's surge as Saudi Arabia and Russia continued their cooperation pact. The pound erased a gain as the threat of a vote to bring down British Prime Minister Theresa May's government looms should Parliament reject her Brexit deal.

West Texas Intermediate crude rose 0.3 per cent to US$53.26 a barrel.