Shares rise to 3-month high; Asia FX strengthens slightly

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    SYDNEY- Asian shares extended gains on Monday to hit a three-month high as risk assets got a fillip from hopes of a US-China trade deal as soon as next month while the dollar marked time as focus shifts to a US rate decision.

    In early Asian trades, MSCI’s broadest index of Asia-Pacific shares outside Japan added 0.3 percent for its third straight day of gains to 518.29, the highest since late July.

    Chinese shares were a tad firmer with the blue-chip CSI 300 up 0.2 percent. Hong Kong’s Hang Seng index jumped 0.7 percent while Australian shares climbed 0.1 percent.

    Japan’s Nikkei was also upbeat, rising 0.3 percent to a decade high.

    The gains came after a positive session in US and European markets on Friday.

    Most Asian currencies eked out narrow gains as hopes of a partial resolution to the festering trade dispute between the United States and China by next month whetted risk appetites.

    The gains, however, were capped as the dollar firmed ahead of a US Federal Reserve meeting this week where policymakers are expected to cut interest rates but emphasize their reluctance to ease policy further.

    Also, the overall trading activity was light in the region owing to holidays in Singapore, India and Malaysia.

    Sino-US trade tensions, which have roiled global financial markets for more than a year, would be reduced if the first phase of a deal between the world’s top two economies can be signed next month in Chile.

    On Friday, the US Trade Representative’s office and China’s Commerce Ministry said officials are “close to finalizing” some parts of a trade agreement after high-level telephone discussions.

    Investors are also awaiting the developments from the meetings late this week of the US Federal Reserve and Bank of Japan.

    “A rate cut from the Fed looks a done deal this week as it takes out more insurance against elevated external risks,” ANZ Research said in a note on Monday. “Forward policy guidance may point to the Federal Open Market Committee taking some time out to observe the impact of recent cuts.” —Reuters