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Most Asian shares inched higher on Wednesday after a solid Wall Street finish, although gains were capped by weak data in the region and worsening fears over turbulent China-US trade relations.

Global markets went up on Tuesday, supported by a report that the United States and China were aiming to continue discussions to squash a spat over trade tariffs.

On the other hand, late reports that the US is considering tariffs of 25 percent on $200 billion in Chinese imports fueled uncertainties back into the financial markets.  The offshore yuan and the Aussie dollar were lower, with Chinese shares down.

According to a source, an announcement on Washington’s tariffs plans for China could come as early as Wednesday.

The apparently contradictory signals on the US-China trade condition are quite unclear for investors, stated Ryan Felsman, who is a senior economist at CommSec in Sydney.

“It’s a little bit confusing, but really I think markets are… focused more broadly on the earnings season that’s going on the US, and also Australia is about to begin its corporate earnings season,” he stated.

In Asia, MSCI’s broadest index of Asia-Pacific shares excluding Japan was higher 0.1 percent.  Japan’s Nikkei stock index increased 0.7 percent.  The S&P e-mini futures were lower less than 0.1 percent at 2,815.25 after they edged up earlier.

The Taiwan weighted index increased 0.3 percent, with tech shares gaining some support after Apple Inc topped Wall Street expectations for its quarterly results, attributed to the strong sales of its top-of-the-line iPhone X.  The company’s shares perked up 3.4 percent higher to $196.80 during after-hours trading.

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On the flip side, shares in mainland China slipped, ditching early gains, with the fears over the looming trade war and newly released manufacturing data indicating a blurry economic outlook.

China’s manufacturing sector grew to a sluggish pace in eight months in July, weighed down by declining export orders, based on a private survey on Wednesday.

The Shanghai Composite Index slipped 0.3 percent, while the blue-chip CSI300 index dropped 0.4 percent.

Data from Australia also showed a sluggish growth in the manufacturing activity for July , with the Commonwealth Bank/Markit purchasing managers index at its lowest level in nearly two years.

Australian shares were moving sideways, with some support from miners prior to the expected robust results from Rio Tinto later on Wednesday.

Policy meetings of the US Federal Reserve on Wednesday and the Bank of England on Thursday will also make investors stay on the sidelines, even though the US central bank is anticipated to keep rates unmoved.

Even if that was the case, “investors are more likely to be concerned with any potential tweaks in the language of the policy statement.  Buying sentiment toward the dollar could receive boost if the central bank strikes a hawkish tone,” said Lukman Otunuga, who is a research analyst at FXTM. 

The yield on the benchmark 10-year Treasury notes was at 2.9728 percent, compared with its US close of 2.964 percent on Tuesday.

The 2-year yield, which increases with traders’ expectations of higher Fed fund rates, reached 2.6735 percent compared with a US close of 2.669 percent.

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