Asia shares recover as China stocks rise after weak data

TOKYO, Jan 10 (Reuters): Asian shares edged up on Thursday as stimulus expectations and a rise in the yuan helped Chinese equities erase early losses, while markets awaited more news on US-China trade talks amid hopes that an all-out trade war can be averted.

MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3 per cent, hovering at a near four-week high.

China's blue-chip CSI 300 and Hong Kong's Hang Seng gained 0.3 per cent and 0.1 per cent, respectively.

Chinese shares recouped earlier losses as weak inflation data raised the prospect of further government stimulus.

The yuan strengthened, breaching the key 6.8 per dollar level for the first time since August in both onshore and offshore trade, further boosting appetite for riskier assets.

Australian shares added 0.3 per cent, but Japan's Nikkei closed 1.3 per cent lower.

Delegations from China and the United States ended three days of trade talks in Beijing on Wednesday in the first face-to-face negotiations since both sides agreed a 90-day truce in a trade war that has disrupted the flow of hundreds of billions of dollars of goods.

China's commerce ministry said on Thursday the talks were extensive, and helped establish a foundation for the resolution of each others' concerns.

However, there were few concrete details on the meetings in Beijing, which were not at a ministerial level, so were not expected to produce a deal to end the trade war.

Risk assets extended a days-long rally overnight after minutes from the Fed's December meeting showed that many policymakers believed they could be patient about future monetary tightening, while a few did not support the central bank's rate increase last month.

Figures out of China on Thursday showed the country's consumer prices and factory-gate inflation both rose less than expected in December, with the latter rising at the slowest pace in over two years.

Factory-gate inflation turned negative for the second straight month.

"If this trend persists, it may turn negative on year-on-year terms this year and more radical stimulus measures, such as benchmark interest rate cuts, may become possible," said Betty Wang, Senior China Economist at ANZ Research.