TOKYO (AFP) - Asia stocks pared losses by midday on Thursday (Aug 16) on news that China and the US would hold trade talks after opening sharply lower and joining a global sell-off on concerns over Turkey's financial crisis.
Equities across the region suffered steep losses at the opening bell, with Tokyo and Shanghai off by more than one per cent, 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 per cent in early trade and China's benchmark Shanghai Composite was off by 1.17 per cent 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 per cent.
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.
TOKYO (REUTERS) - Asian shares hit fresh one-year lows in early trading on Thursday (Aug 16), while oil and precious metal prices also tumbled as Turkey's currency crisis and fears of an economic slowdown in China fanned worries about global growth.
MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.0 per cent, while Japan's Nikkei and the Australian benchmark dropped 1.2 per cent and 0.4 per cent, respectively.
China stocks continued to sag, with the Shanghai Composite Index and Hong Kong's Hang Seng index shedding 1.1 per cent and 0.9 per cent, respectively.
Tech shares came under pressure after China's Tencent Holdings reported its first quarterly profit fall in nearly 13 years on weak gaming revenue. The knock to the rest of the sector sent South Korea's Samsung Electronics to a one-year low.
Wall Street's major indexes closed lower on Wednesday, with the S&P 500 down 0.8 per cent, its biggest percentage drop since late June, amid disappointing earnings and escalating global trade worries.
"Negative news come from Turkey and China every day is upsetting global markets," said Norihiro Fujito, senior market strategist at Mitsubishi UFJ Morgan Stanley Securities.
"Also, Tencent's earnings shock hurt tech stocks, sending the tech-heavy Nasdaq lower. It reminded investors that the US-China trade spat is starting to harm the health of even the tech firms, which had been a major driver of the US share rally."
Oil prices took an additional hit after data showed a surprise weekly increase in US crude stockpiles, compounding worries about a weaker global economic growth outlook.
US crude oil fell to two-month lows, falling 0.6 per cent in early Asian trade to as low as US$64.42 per barrel, after Wednesday's 3.2 per cent fall.
Brent slipped 0.25 per cent to US$70.58, after a fall of 2.4 per cent on Wednesday.
Spot gold dropped 1.0 per cent to US$1,162.31 an ounce in early Asian trade on Thursday, hitting its lowest levels since January last year.
Copper lost 4.0 per cent to US$5,801.00 a tonne and zinc fell 6.3 per cent, touching its lowest level since October 2016 on Wednesday.
The escalation in global trade tensions continued to weigh on sentiment with Beijing lodging a complaint to the World Trade Organization to determine the legality of US tariff and subsidy policies.
Turkey also raised tariffs on some US products in response to Washington's levies, Vice President Fuat Oktay wrote on Twitter.
The United States on Wednesday ruled out removing steel tariffs that have contributed to a currency crisis in Turkey even if Ankara frees a US pastor, as Qatar pledged US$15 billion in investment to Turkey, supporting a rise in the Turkish lira.
The euro and the offshore Chinese yuan bounced back following a report that Chinese delegation led by vice commerce minister Wang Shouwen will travel to the United States for trade talks in late August.
The euro and yuan gained 0.2 per cent and 0.3 per cent, respectively.
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 US$34 billion, with much more threatened.
The two countries plan to launch a new round of tariffs on US$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.