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Chinese and Hong Kong stock prices rise ahead of Sino-US Trade Talks

Chinese and Hong Kong shares edged up on Monday, with rare earths and technology sectors leading the way, as investors awaited U.S. China trade negotiations at a high level in London.

Investors are cautiously optimistic as world's largest economies try to resolve their trade dispute. China is struggling with slow exports, deflation and eroding consumer confidence.

The first meeting of the economic and trade consultative mechanism between the United States and China will be held by U.S. Treasury Sec. Scott Bessent and Commerce Sec. Howard Lutnick, along with Trade Rep Jamieson Greer.

The Shanghai Composite Index and China's blue chip CSI300 Index both closed 0.4% higher. Hong Kong's Hang Seng index rose 1.6%, reaching its highest level since March 21, 2013.

Last traded at 7,1852 dollars per yuan, the offshore yuan was struggling to find its direction.

The meeting on Monday follows a rare call between U.S. president Donald Trump and Chinese leader Xi Jinping, which took place Thursday. Tensions had risen again after both sides accused the other of breaking a deal reached last month.

After talks in Geneva, the two sides agreed to a 90 day pause and a drastic reduction in tariffs. From May 14 until August 12, U.S. duties on Chinese imports were set at 30% and Chinese duties at 10%. This brought temporary relief to a trade conflict that could have caused $600 billion of two-way trade in both directions to come to a halt, disrupting supply chain and impacting global economy.

Analysts at China Securities wrote in a report that they thought the meeting could have some positive outcomes, as Trump had hinted at some positive signals. They added that any progress made would provide some relief to the markets.

Leading onshore markets higher on Monday, the strategically-important rare earths sector - expected to be a key focus of the talks - advanced 2.4% onshore in its best single-day performance in over a month.

Hong Kong's markets rose on the back of technology shares, as the Hang Seng Tech Index rose 2.8% to an all-time high. The subindex is up over 20% from its low in April, entering a bull market.

Since April 2, when Trump announced the "reciprocal tariffs" that threatened to upset global trade order, Chinese stocks have struggled for direction.

The CSI300 Index has barely moved from its April 2 level and the Hang Seng gained about 4% in the same period. Both markets are lagging behind the global recovery. Reporting by Jiaxing LI in Hong Kong. (Editing by Rashmi aich and Mark Potter.)

(source: Reuters)