By Hideyuki Sano
TOKYO (Reuters) - Asian shares closed in on their July peak on Tuesday on increasing signs the United States and China are inching closer to a truce in their trade war and on optimism the U.S. economy is well poised for solid, consumer-driven growth.
MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> was little changed in early trade after hitting a four-month high the previous day.
Japan's Nikkei <.N225> rose 1.34% to one-year high after a market holiday on Monday.
On Wall Street, the S&P 500 <.SPX> gained 0.37% to a record high of 3,078.27 on Monday while the Dow Jones <.DJI> and the Nasdaq <.IXIC> also clinched all-time highs.
In Europe, shares rallied more than 1%, with many reaching their highest level since January 2018. The STOXX 600 index <.STOXX> of small, mid-sized and large companies across Europe surged to highs last seen in July 2015.
U.S. S&P500 futures
The story came after Beijing and Washington spoke of progress in trade talks on Friday and U.S. Commerce Secretary Wilbur Ross said licenses for U.S. companies to sell components to China's Huawei Technologies Co will come "very shortly."
U.S. employment data released on Friday showed strong job gains despite the drag from a strike at General Motors
"The data suggests the U.S. is almost in a full employment. More importantly those strong numbers came after three rate cuts by the Fed," said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
"When the Fed did precautionary easing in the past - after Mexico crisis in 1994 and Asia/Russian crisis in 1997-98 - a rally in stock prices followed. No wonder money is flowing to risk assets now," he said.
Bonds are losing some of their appeal and the yield on benchmark 10-year notes rose back to 1.799%
In the currency market, the dollar gained to 108.60 yen
Trade optimism kept the Chinese yuan near its highest levels since mid-August, with the offshore yuan at 7.0246 per dollar
The euro changed hands at $1.1128
The Australian dollar traded at $0.68915
Still, that has did little to change market expectations that the Reserve Bank of Australia is expected to hold fire on Tuesday.
Oil prices held firm after hitting their highest levels since late September, buoyed by an improved outlook for crude demand as better-than-expected U.S. jobs growth added to market hopes a preliminary U.S.-China trade deal would be reached this month.
U.S. West Texas Intermediate (WTI) crude
(Editing by Lincoln Feast)
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Updated Date: Nov 05, 2019 07:05:39 IST