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Asian shares mixed on report of Huawei investigation

SINGAPORE — Asian shares were mixed Thursday on fears that a reported U.S. investigation of China’s Huawei would derail trade talks between the world’s two largest economies.

KEEPING SCORE: Hong Kong’s Hang Seng dropped 0.1 per cent to 26,866.94 while Australia’s S&P ASX 200 rose 0.3 per cent to 5,850.10.The Shanghai Composite index lost 0.1 per cent to 2,567.21. Japan’s Nikkei 225 index edged 0.2 per cent lower to 20,402.27 while South Korea’s Kospi added 0.1 per cent to 2,107.06. Shares rose in Taiwan, Thailand and Indonesia but fell in Singapore.

WALL STREET: Strong earnings reports by financial and investment companies like Goldman Sachs spurred gains Wednesday. But worries about U.S.-China relations put a drag on sentiment. The broad S&P 500 index rose 0.2 per cent to 2,616.10, after rising as much as 0.6 per cent during the day. The Dow Jones Industrial Average was 0.6 per cent higher at 24,207.16 and the Nasdaq composite gained 0.2 per cent to 7,034.69. The Russell 2000 index of smaller company stocks climbed 0.7 per cent to 1,454.70.

US-CHINA TENSIONS: A Wall Street Journal report, citing people familiar with the matter, said federal prosecutors were investigating China’s Huawei Technologies Ltd. for allegedly stealing trade secrets from American companies including T-Mobile. The report said the investigation resulted from several civil lawsuits against Huawei and an indictment could be issued soon. This revived worries over relations between the two countries as officials struggle to find a compromise ahead of the Mar. 1 end of a moratorium on raising tariffs against each other’s exports. Negotiators from both countries recently held trade talks in Beijing and more high level negotiations are in the works.

ANALYST’S TAKE: Suggestions that the U.S. is investigating Huawei “raise questions about whether trade optimism is premature and crucially, whether more fundamental and strategic tensions between the U.S. and China induce a longer-term, slow-burn drag,” Vishnu Varathan of Mizuho Bank said in an interview.

BREXIT HURDLE: On Wednesday, British Prime Minister Theresa May survived a no-confidence vote by a narrow margin of 325 to 306. This comes after lawmakers rejected a deal she brokered for Britain’s exit from the European Union. May has said she will talk to opposition parties and other lawmakers to come up with a Plan B. Leaving the bloc without a deal on March 29 is expected to be bad for the economy, as inflation and unemployment soars.

ENERGY: Benchmark U.S. crude oil fell 26 cents to $52.05 per barrel in electronic trading on the New York Mercantile Exchange. The contract gained 20 cents to settle at $52.31 per barrel on Wednesday. Brent crude, the international standard, dropped 24 cents to $61.08. It added 68 cents to $61.32 a barrel in London.

CURRENCIES: The dollar eased to 108.89 yen from 109.13 yen late Wednesday. The euro edged down to $1.1391 from $1.1394, while the British pound retreated to $1.2879 from $1.2885.

Annabelle Liang, The Associated Press