HONG KONG, Nov 05 (AFP): Asian markets fell on Monday after Donald Trump's top economics adviser downplayed the chances of a quick deal to end the China-US trade war, taking the wind out of the sails of last week's rally.
The US leader fuelled a surge in the region's equities Friday by tweeting that he had held positive talks with Chinese President Xi Jinping, before a report said he had even asked officials to draw up a draft bill with an eye on a potential agreement.
But White House adviser Larry Kudlow later tempered expectations, telling CNBC "there's no massive movement to deal with trade".
The news sent US markets into the red, snapping a three-day rally on Wall Street, and sending Asian investors rushing for the door.
"Investors are far too wary of an empty promise," said Stephen Innes, head of Asia-Pacific trade at OANDA.
"But ultimately, they will need to decide how much of President Trump's olive branch to China was a ploy to boost equity markets ahead of the US mid-term elections on Tuesday and how much of it is a bona fide attempt to reach an agreement."
Hong Kong - which climbed more than four per cent Friday in its best day for almost seven years - sank more than two per cent, while Shanghai ended down 0.4 per cent.
Dealers are keeping tabs on a massive import expo in Shanghai that Xi opened Monday by telling delegates China would increase efforts to open up its economy.
He said authorities would "step up" moves to stimulate domestic consumption of imports, lower tariffs, ease customs clearance procedures, and implement harsh punishments for intellectual property infringements, a key cause of Washington's anger with Beijing.
Tokyo finished 1.6 per cent lower, Singapore dropped 1.7 per cent and Seoul was 0.9 per cent off. Wellington and Taipei were also deep in negative territory, while Sydney dropped 0.5 per cent.
In early European trade London fell 0.1 per cent, while Paris and Frankfurt were flat.
Traders are now keeping an eye on the US mid-term elections Tuesday, which are seen as a vote on Trump's performance since taking the White House, with the Democrats looking to take control of the House of Representatives.
