Asia markets extend losses despite Wall Street gains

HONG KONG: Asian markets largely extended their losses on Wednesday despite Wall Street registering strong gains as investors remained on edge over escalating US-China trade tensions.

Asia's losses came despite a gain of more than one percent for US indices as Wall Street recovered from a multi-session losing streak that saw the Dow hit its lowest level this year.

Equities had tumbled Monday after Beijing allowed the yuan to slide sharply against the dollar following US President Donald Trump's announcement that he would impose 10 percent tariffs on another $300 billion in Chinese goods starting September 1.

But Beijing's move to stabilise the yuan after it dropped below the key 7.0 per dollar threshold helped to ease fears of a currency war despite Washington formally branding China a "currency manipulator".

"The move... to strengthen the yuan calmed markets after a drop on Monday. Emerging markets got some breathing room and rebounded", said Edward Moya, senior market analyst at OANDA.

But he warned that "trade war concerns remain very much front of mind.... at this point more details and statements from both sides are needed to inject calm into a volatile market".

Hong Kong fell 0.7 percent despite inching up at the open, while Tokyo shed 0.8 percent amid safe-haven purchasing of the yen.

A strong yen clouds the outlook for Japanese exporters as it reduces their profits when they are repatriated.

Shanghai also dropped 0.2 percent. But other emerging markets saw gains, with Jakarta and Manila climbing around one percent.

US-China trade tensions have risen sharply since last week following Trump's latest tariffs announcement, which would subject virtually all of the $660 billion in goods traded between the world's two top economies to punitive duties.

The yuan's slump fuelled speculation that Beijing was devaluing the currency to support exporters and offset the tariffs threat, infuriating Washington.

Multiple rounds of tit-for-tat tariffs between the two countries have already battered trade and raised fears for the health of the global economy.

Chinese and US negotiators are set to reconvene in Washington in early September for another round of talks after last week's discussions in Shanghai, but expectations of a deal are low.