Hong Kong (CNN Business)Asian markets regained some lost ground on Tuesday, but investors are still wary about the US-China trade war.
Hong Kong’s Hang Seng Index (HSI) moved marginally higher, up 0.1%. It tumbled 1.9% on Monday. China’s Shanghai Composite Index (SHCOMP) advanced 1.7%. Japan’sNikkei (N225) rose 1.2%. South Korea’s Kospi (KOSPI) also gained 0.7%.Markets in the region dropped Monday in the wake of tariff hikes announced by the United States and China. But the trade war took a positive turn after signs that the two sides could come back to the bargaining table. European and US stocks bounced higher. While the mood now isn’t as “dire” as it was after the weekend’s escalations, “there remains doubts with regards to how concrete the latest turn is,” wrote Jingyi Pan, a market strategist for IG Group, in a research note Tuesday.Read MoreDow gains 270 points thanks to trade optimismUS President Donald Trump told reporters in France on Monday that “China called last night” to relay a desire to return to negotiations. Asked later about Trump’s remarks, Chinese Foreign Ministry spokesman Geng Shuang said he hadn’t “heard about the weekend phone calls that the US mentioned.”He added that China hopes that the United States will “not let emotions sway their feelings” in relation to trade talks.Pan noted the “lack of confirmation from China” in her research note, adding that “few may be expecting a straight road towards a deal of late regardless of the type of conciliatory remarks.”China’s central bank also set its daily reference rate for the yuan at 7.081 for one US dollar — yet another 11-year low. But the currency traded more strongly than it did Monday in both onshore and offshore trading. Analysts at Bank of America Merrill Lynch forecast that the exchange rate will reach 7.50 yuan to one US dollar by the last quarter of the year. They expect that the currency will gradually weaken, but it could drop more sharply “when tariff increases are confirmed or escalated.”Other analysts have said that China shows no signs of engaging in a full-blown currency war, but have added that the escalating trade war likely has given Beijing less incentive to prop up its currency in the face of mounting pressure on the economy.