By Joanne Chiu

Hong Kong's benchmark Hang Seng Index rebounded 0.5%, putting it on course to break a five-session losing streak, while Japan's Nikkei Stock Average advanced by similar amount after falling for two days. Stock indexes in South Korea, Taiwan and Singapore rose, while China's benchmark Shanghai Composite Index fell slightly.

Friday's Big Theme

A fresh round of U.S.-China trade talks next week and a Friday speech by Federal Reserve Chairman Jerome Powell are in focus for investors after a tumultuous week triggered by a currency crisis in Turkey.

What's Happening

The Chinese yuan was buoyed by the resumption in trade negotiations, strengthening 0.8% to 6.8792 yuan against the dollar Thursday. It weakened slightly to 6.8840 a dollar by midday Friday in Hong Kong.

Asia-Pacific markets have been battered by a selloff in technology shares, a strong dollar and trade tensions. The MSCI AC Asia Pacific Index is down nearly 14% from a high in January. As of Thursday's U.S. close, the index had lost 2.4% in four sessions, putting it on track for its worst week since March.

Across emerging markets, a key MSCI benchmark teetered on the edge of bear-market territory with a 19.8% drop as of Thursday's close, compared with its previous peak earlier in the year.

Turbulence in Turkey has crimped investor appetite for emerging-market assets, particularly in China and South Africa. Withdrawals from the two countries contributed more than two-thirds of the $1.4 billion in outflows from emerging stocks and bonds in the week ended Aug. 15, according to the Washington-based Institute of International Finance.

Market Reaction

Chris Weston, head of research at brokerage Pepperstone Group, said some investors took the reopening of trade talks as a cue to buy riskier assets, such as stocks. But he said a breakthrough is unlikely, given these would be relatively low-level talks, and the U.S. is still likely to place tariffs on another $200 billion of Chinese goods.

Peter Chia, senior foreign-exchange strategist at UOB Group, said souring U.S.-China trade relations could put more pressure on Southeast Asian currencies, since many regional economies rely heavily on business with China.

Elsewhere

Chinese tech stocks in Hong Kong regained some ground. Shares in Tencent Holdings Ltd. rose 2.9% to 335.20 Hong Kong dollars ($42.70), trimming losses this year to 17.4%. On Wednesday, the index heavyweight reported its first year-over-year drop in quarterly profit in more than a decade. Handset maker Xiaomi Corp. and online insurer ZhongAn Online P&C Insurance Co. advanced more than 1%.

Write to Joanne Chiu at joanne.chiu@wsj.com

(END) Dow Jones Newswires

August 17, 2018 02:08 ET (06:08 GMT)

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