HONG Kong shares closed higher on Tuesday, as they played catch-up with a global rally seen in the previous session, when the island nation was closed for holiday, while doubts whether Washington and Beijing can pull off a trade deal capped gains.

The Hang Seng index ended up 1.2% at 28,875.56 points, while the China Enterprises Index closed 0.9% firmer at 10,981.23 points.

U.S. President Donald Trump said on Monday that trade talks with China were underway and any deal would need to be somewhat tilted in favour of the United States. The U.S. government also threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.

Trump and Chinese President Xi Jinping agreed at a G20 summit in Japan to restart trade talks after the last major round of negotiations collapsed in May.

Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.31%, while Japan’s Nikkei index closed up 0.11%.

The yuan was quoted at 6.8726 per U.S. dollar at 0815 GMT, 0.29% weaker than the previous close of 6.853.

The top gainers among H-shares were Dongfeng Motor Group Co Ltd, which closed up 6.25%, followed by China Tower Corp Ltd, which ended 4.88% firmer and ANTA Sports Products Ltd, which ended up 4.01%.

The three biggest H-shares percentage decliners were Industrial and Commercial Bank of China Ltd, which ended down 0.53%, China Communications Construction Co Ltd , which closed 0.43% lower and China Railway Group Ltd , which ended down 0.17%.

At close, China’s A-shares were trading at a premium of 29.19% over Hong Kong-listed H-shares. - Reuters