Asian shares climb amid progress in US-China trade deal talks

Asian shares rose on Wednesday as upbeat signals from Sino-US trade talks fanned hopes of an easing of tariff hostilities, while expectations the Federal Reserve will keep interest rates low supported sentiment.

The positive mood pushed Wall Street indexes to fresh record closing highs on Tuesday and stoked confidence in Asia with MSCI's broadest index of Asia-Pacific shares outside Japan up 0.19%. Australian shares added 0.65% and Japan's Nikkei rose 0.36%.

Chinese blue-chip shares, in contrast, dropped 0.39% after the data showed profits at China's industrial firms declined in annual terms for the third consecutive month in October, tracking sustained drops in producer prices and exports and underscoring slowing momentum in the world's second-largest economy.

US President Donald Trump said on Tuesday the United States and China are close to agreement on the first phase of a trade deal after top negotiators from the two countries spoke by telephone and agreed to keep working on remaining issues.

Kay Van-Petersen, global macro strategist at Saxo Capital Markets in Singapore, said while US-China trade headlines may be driving some tactical, near-term moves in the market, they were mostly just "noise".

The broader market direction is "about the accommodative Fed and accommodative monetary policy and the fact that structurally the meta-trend is still lower in yields and rates," he said.

On Tuesday, the Dow Jones Industrial Average rose 0.2% to 28,121.68, the S&P 500 gained 0.22% to 3,140.52 and the Nasdaq Composite added 0.18% to 8,647.93. All three indexes notched record closing highs.

On Wednesday, the rally in US Treasuries moderated across the curve, with benchmark 10-year notes yielding 1.7483%, up from their U.S. close of 1.74% on Tuesday.

The two-year yield, watched as a guide to market expectations of Fed policy, rose to 1.5959% compared with a U.S. close of 1.586%.

In currency markets, the dollar strengthened 0.06% against the yen to 109.10 and the euro was slightly weaker, buying $1.1017.

The dollar index, which tracks the greenback against a basket of six major rivals, was up 0.06% at 98.313.