Nikkei jumps to 13-month high as U.S.-China trade hopes brighten mood

TOKYO, Nov 5 (Reuters) - Japan’s benchmark Nikkei share average leaped to 13-month highs on Tuesday after a long weekend, as U.S. and Chinese trade negotiators moved closer to sealing a preliminary deal and upbeat Wall Street stocks lifted investor sentiment.

Broad-based buying sparked a 1.8% rally in the Nikkei average to 23,251.99, its highest close since Oct. 10 of last year. The broader Topix advanced 1.7% to 1,694.16, its best finish in more than a year.

On Monday, all three major stock indexes on Wall Street finished at record highs on increasing signs the United States and China are inching closer to a truce in their trade war and on optimism solid consumer-driven growth will underpin the U.S. economy.

U.S. S&P 500 futures gained as much as 0.3% in Asian trade on Tuesday after the Financial Times reported that the United States is considering dropping some tariffs on China. They were last up 0.2%.

China is pushing U.S. President Donald Trump to remove more tariffs imposed in September as part of a “phase one” U.S.-China trade deal, expected to be signed later this month, people familiar with the negotiations said on Monday.

The report came after Beijing and Washington spoke of progress in trade talks on Friday and U.S. Commerce Secretary Wilbur Ross said licenses for U.S. companies to sell components to China’s Huawei Technologies will come “very shortly”.

“Political uncertainties are receding. That means those who had held off their activities, both in the real economy and financial markets, are getting active,” said Masaru Ishibashi, joint general manager of trading at Sumitomo Mitsui Bank.

On the data front, U.S. non-farm payrolls released on Friday slowed less than expected in October as the drag from a strike at General Motors was offset by gains elsewhere, offering some assurance that consumers would continue to support the slowing economy.

In Tokyo, China- and semiconductor-related companies led the gains on Tuesday.

Construction machinery makers Komatsu and Hitachi Construction climbed 5.4% and 5.1%, respectively, while Kobe Steel added 2.8%.

Chip-related SUMCO advanced 3.1%, while Rohm and Renesas Electronics surged 5.1% and 7.0%, respectively.

The Nikkei’s heavyweight SoftBank Group rallied 2.4% to become the second-most traded stock on the Tokyo’s main board.

The investment conglomerate said on Friday it would book a 277 billion yen ($2.5 billion) gain in the second quarter after portfolio company Alibaba Group Holding recorded a $9.7 billion gain related to its stake in Ant Financial.

Z Holdings, formerly known as Yahoo Japan Corp, soared 16.4% after the e-commerce firm’s operating profit rose by 11.2% year-on-year in the July-September quarter.

Elsewhere, Fujifilm Holdings climbed 6.7% after the Wall Street Journal reported that Xerox has agreed to sell its 25% stake in the joint venture, Fuji Xerox, to Fujifilm for $2.2 billion, citing sources. The two companies announced the ending of the 57 year-old joint venture after the market close.

$1 = 108.6600 yen Reporting by Tomo Uetake; Additional reporting by Hideyuki Sano; Editing by Muralikumar Anantharaman & Shri Navaratnam