Asia shares regain footing as mood swings on trade

Asian shares made guarded gains on Monday as investors dared to hope for some progress in the endless Sino-US trade dispute, while the outperformance of recent US economic data gave the dollar a leg up on its peers.

MSCI's broadest index of Asia-Pacific shares outside Japan bounced 0.8%, after losing 0.4% last week.

Japan's Nikkei firmed 0.9%, while Australian stocks rose 0.5% and Shanghai blue chips 0.4%.

E-Mini futures for the S&P 500 added 0.3%, while EUROSTOXX 50 futures gained 0.6%.

On Saturday, US national security adviser Robert O'Brien said an initial trade agreement with China is still possible by the end of the year, though he warned Washington would not turn a blind eye to what happens in Hong Kong.

The comments add to worries that a Chinese crackdown on anti-government protests in Hong Kong could further complicate the talks.

Over the weekend, pro-democracy candidates in Hong Kong romped to a landslide and symbolic majority in district council elections in the embattled city.

"Markets are showing some signs of tiring of the steady drip feed of upbeat comments from US officials and no signs of a final agreement looking likely," said Robert Rennie, head of financial market strategy at Westpac.

In currency markets, the dollar had rallied on Friday when US manufacturing surveys beat forecasts, just as European Union numbers disappointed.

"US economic data outperformed, highlighting again the resilience of the economy and that while global growth has slowed, it remains the least dirty t-shirt in the laundry basket," said Tapas Strickland, a director of economics and markets at National Australia Bank.

The euro was off at $1.1023 on Monday, having breached chart support at $1.1040, while the dollar edged up to 108.75 yen.

The dollar was steady on a basket of currencies at 98.243 , after gaining 0.3% last week.