Asian markets mostly rose Friday as a sense of optimism returned to trading floors after a report said China's point man on the US tariffs talks had offered to host a meeting to help push through their crucial mini pact.
However, investors were nervous that the deal could collapse at any minute after US lawmakers passed a bill supporting Hong Kong rights, causing anger in Beijing.
Expectations that the economic superpowers would be able to sign off on the agreement soon has helped fan a rally across world markets for weeks, though a lack of detail or signs of progress of late is becoming unsettling for many.
Hopes were given a lift Thursday after the Wall Street Journal said top negotiator Vice Premier Liu He had invited his US counterparts for further discussions to haul the deal over the line.
That came a day after He had expressed confidence they would eventually reach a breakthrough.
Adding to the positivity was a report in the South China Morning Post that said Washington would probably delay imposing fresh tariffs planned for next month, even if they have not reached a deal by then.
The rolling back of levies is a key demand of China's in the talks.
"The market is looking for some bullish signal that things aren't going to get worse and that we're not going to see further deterioration in trade talks between the US and China," Erin Browne, at Pacific Investment Management, told Bloomberg TV.
"They just don’t want to see further escalation."
- China 'not afraid' –
On Friday, President Xi Jinping said China wanted to hammer out a deal but was "not afraid" to fight back when necessary. He told former US officials and other foreign dignitaries at a meeting in Beijing that he wanted to "work for a phase-one agreement on the basis of mutual respect and equality".
The remarks came two days after Donald Trump complained Beijing had not made sufficient concessions so far, making him reluctant to conclude a bargain.
Asian investors broadly maintained early gains. Hong Kong added 0.3 percent in the afternoon, while Tokyo ended up 0.3 percent.
Singapore rose 0.7 percent, Sydney rose 0.6 percent, Seoul and Bangkok gained 0.3 percent, while Taipei was up 0.1 percent.
However, Shanghai slipped 0.6 percent while Wellington, Manila, Mumbai and Jakarta were in the red.
Eyes are on the White House after Congress sent the Hong Kong bill to Trump to sign into law. Beijing has warned of consequences over the bill and there are fears for the trade talks if Trump signs it. Worries about China's reaction caused a sharp drop on global markets Thursday.
Still, some observers say that while highly contentious, the bill will more likely prevent a more detailed agreement being reached rather than cause the complete collapse of the talks.
Stephen Innes at AxiTrader said the fact that Liu had offered the invitation and remained optimistic "indicates that China may be willing to compartmentalise this contentious bill away from the broader trade negotiations".
But he added that "this tangled web of trade talk confusion has investors sitting in that all-too-familiar predicament of trade war limbo".
And David Madden at CMC Markets said that Thursday "was a bit of a downbeat day as stocks lost ground, but if traders were genuinely fearful about the trade story, stocks would be much lower".
The broadly upbeat mood provided support to higher-yielding currencies such as the South Korean won, South African rand and Mexican peso.
The Chinese yuan was also up against the dollar, while the greenback made gains on the yen, which is usually seen as a safe asset in times of turmoil.