Japan stocks end higher on hopes for U.S.-China thaw

By Stanley White
TOKYO, Oct 10 (Reuters) - Japanese stocks bounced back from
early losses to end higher on Thursday, helped by a flush of
optimism over chances that the United States and China can scale
back their trade war at high-level talks set for later in the
day.
The Nikkei index ended up 0.45% at 21,551.98, after shedding
as much as 0.7% earlier in the day.
Japanese shares were boosted by a New York Times report that
U.S. President Donald Trump's administration will soon issue
licences allowing some U.S. companies to supply non-sensitive
goods to Chinese telecommunications equipment maker Huawei
Technologies Co Ltd HWT.UL . This could be seen as a concession to China that would make
it easier to resolve the trade row.
Trump's administration effectively blacklisted Huawei in
mid-May, alleging it is involved in activities that compromise
national security, a charge the company denies.
Analysts, however, caution that a resolution to the bruising
year-long trade war is far from certain, and that global supply
chains are already shifting in response to the fraught
relationship between the world's two-largest economies.
"The belief in the markets right now is supporting stocks
and is a positive for Japanese exporters, because they ship a
lot of goods to manufacturers in China," said Daiju Aoki,
regional chief investment officer for Japan at UBS Securities.
"But the problem is that manufacturers are shifting
production out of China, so in the long term Japan's
manufacturers won't benefit as much."
Japanese shares started on the back foot after a South China
Morning Post report spread pessimism over prospects for the
trade talks. A tariff war has raged for 15 months, and without
significant progress, the United States is set to hike the
tariff rate on $250 billion worth of Chinese goods to 30% from
25% next Tuesday.
In Japan, there were 141 advancers on the Nikkei index
against 80 decliners on Thursday.
The largest percentage gainers in the index were Aeon Co Ltd
8267.T , up 6.81%, followed by Kawasaki Kisen Kaisha Ltd
9107.T , up 4.70%, and AGC Inc 5201.T , up 3.87%.
Bandai Namco Holdings Inc 7832.T lost 1.93% , Daiichi
Sankyo Co Ltd 4568.T shed 1.90%, and Nikon Corp 7731.T was
down by 1.82%, making the three biggest losers on the index in
percentage terms.
The broader Topix index .TOPX ended down 0.02% at
1,581.42.
The volume of shares traded on the Tokyo Stock Exchange's
main board .TOPX was 0.92 billion, compared to the average
1.21 billion yen in the past 30 days.

(Editing by Subhranshu Sahu; Editing by Simon Cameron-Moore)