China and the US have reportedly agreed to a tentative truce in their ongoing trade war, two days before crucial talks at the G20 summit this weekend.
Details of the agreement, which would scrap plans for a further round of US tariffs on an additional $300bn (£236bn) of Chinese goods, will be laid out in press releases, the South China Morning Post reported.
Chinese President Xi Jinping’s meeting with US President Donald Trump, which is scheduled for Saturday morning, is conditional upon Washington agreeing to the tentative agreement, according to the report.
Earlier this week Trump suggested a trade deal was possible, but warned he would impose further tariffs on Chinese imports if there was no progress in the talks.
Speculation over a potential deal sparked optimism among Asian investors, with China’s CSI 300, Hong Kong’s Hang Seng Index and Japan’s Nikkei 225 all up more than one per cent.
“The near hysteria of trying to anticipate the outcome of the meeting between President Trump and his Chinese counterpart Xi Jinping this weekend is now permeating equity trading,” said Fiona Cincotta, senior market analyst at City Index.
The dollar also rallied against the yen following reports China and the US will reach an agreement in Japan this weekend.
It comes after Japan’s foreign minister urged the UK to avoid a no-deal Breixt, warning that some Japanese companies have already started moving their operations elsewhere in Europe.
“We do not want to disrupt the economic relationship with the UK,” Taro Kono told the BBC’s Today programme. “We’ve been asking the UK government to let the Japanese companies know what to expect.”