February 18, 2019 / 2:19 AM / 5 months ago

Nikkei touches 2-month high as U.S.-China trade talks lift mood

* Nikkei up 1.8 pct, brushes highest since Dec 18

* China-related shares up amid Sino-U.S. trade optimism

* Bridgestone surges on share buyback plan

By Shinichi Saoshiro

TOKYO, Feb 18 (Reuters) - Japan’s Nikkei share average touched a two-month high on Monday as investor risk appetite increased amid heightened expectations that the latest negotiations would reduce U.S.-China trade tensions.

The Nikkei was up 1.76 percent at 21,267.80 as of 0200 GMT after brushing 21,278.40, its highest since Dec. 18.

Japanese stocks received a lift after Wall Street surged on Friday as the United States and China reported progress in five days of negotiations in Beijing last week. The two countries will resume talks this week in Washington.

“The market is in the process of gradually pricing in the possibility of the March 1 U.S.-China trade negotiation deadline being extended, led by bids from short-term participants,” said Masahiro Ichikawa, senior strategist at Sumitomo Mitsui Asset Management.

“Political risks still remain a threat, and each development in Washington has to be gauged carefully.”

While the response by U.S. stock markets were limited, U.S. President Donald Trump on Friday declared a national emergency in a bid to fund his promised wall at the U.S.-Mexico border.

Meanwhile, companies that derive a large portion of their sales in China advanced. Industrial machinery maker Komatsu Ltd added 2.7 percent, robot maker Fanuc Ltd rose 2.8percent and Hitachi Construction Machinery Co added 4.4 percent.

Tyre maker Bridgestone Corp gained 5.4 percent after the company said it will buy back up to 200 billion yen ($1.81 billion), or 7.6 percent, of its outstanding stock through Dec. 23.

Restaurant chain operator Hotland Co rose 4.5 percent after the company forecast its 2019 operating profit would jump by 88.2 percent to 1.62 billion yen.

Apartment construction and leasing company Leopalace 21 Corp was down 8 percent, falling for the sixth consecutive session. Leopalace shares have shed about 60 percent in value during the past six sessions, with the company being charged with construction code violations and posting losses related to repair costs.

The broader Topix rose 1.47 percent to 1,600.41. ($1 = 110.5100 yen) (Reporting by Shinichi Saoshiro in Tokyo; Editing by Gopakumar Warrier)

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