Hong Kong stocks ended the morning session on an upbeat note on Friday as investors welcomed Beijing’s pledge that it would not retaliate against the latest US tariffs, raising hopes for an easing of tensions between the two sides.

The Hang Seng Index rose 0.7 percent, or 177 points, to 25,880 by lunch.

The news that Beijing would hold off from responding in kind also came as a big relief for markets across Asia, which have been hit by volatility over the standoff after both sides last week unveiled fresh tariffs.

All three main US indexes ended with steep gains, which filtered through to Asia.

Shanghai gained 0.6 percent, Tokyo and Sydney jumped more than one percent and Seoul rallied 1.7 percent. Singapore, Wellington and Manila each added 0.8 percent, Taipei won more than one percent and Jakarta was up 0.3 percent.

Dealers brushed off data showing the US economy grew at a slower pace than initially thought in the second quarter. Those figures were soothed by the fact that consumer spending remained strong.

“Positive news on trade has investors looking to move back into some of the equity markets and maybe a little more risk on,” Chris Gaffney, president of world markets at TIAA, told Bloomberg News.

And OANDA senior market analyst Jeffrey Halley added that while the 0.1 percentage point downward revision to the growth figure was small, “without the Chinese comments, investors would probably have continued streaming for the exit door”.

“All-in-all it emphasises once again that the US-China trade dispute… remains the only game in town for investors globally, with data a secondary player.”

The easing tensions helped China’s yuan strengthen slightly against the dollar, having fallen to an 11-year low earlier in the week.

And on oil markets both main contracts dipped after surging over the previous three days thanks to the latest developments on the trade talks as well as a plunge in US stockpiles that pointed to improving demand. (AFP)