CHINESE shares ended at their highest level in more than two months yesterday, propelled by hopes of an end to the U.S.-China trade war after the two countries agreed to restart negotiations and the United States said it would postpone further tariffs.

While there were no signs of progress on key sticking points in the trade dispute, the promise of more talks and concessions offered by U.S. President Donald Trump, including an easing of restrictions on tech company Huawei, lifted the benchmark Shanghai Composite Index 2.22 percent to 3,044.90 points. It was the highest close for the index since April 30.

The blue-chip CSI300 Index jumped 2.88 percent to its highest close since April 25, despite fresh signs of domestic economic weakness in factory activity surveys.

The smaller Shenzhen Composite Index rose 3.46 percent by the close, and the startup board ChiNext Composite Index added 3.75 percent.

“We believe the results achieved at the G20 summit will help to further boost investor sentiment and enthusiasm, and we expect the market rebound to continue,” Yan Xiang, an analyst at Guosen Securities, said in a research note.

“Looking at the mid-to-long term, we suggest investors pay closer attention to changes in listed firms’ mid-year reports.”

After meeting with President Xi Jinping in Osaka on Saturday, Trump said China had agreed to make unspecified new purchases of U.S. farm products and return to the negotiating table.

But while Trump said the talks are “back on track,” existing tariffs remain in place and the meeting produced no deadline for progress on a deal.

Information technology firms led the gains, with suppliers to Huawei Technologies Co. surging after Trump said the U.S. Commerce Department would study in the next few days whether to take Huawei off the list of firms banned from buying components and technology from U.S. companies without government approval.

A sub-index tracking IT firms jumped 5.66 percent and one tracking telecom companies added 4.22 percent.

Rare earth producers bucked the broader rally, after gaining in the recent weeks when trade war tensions had intensified.

Broader market gains came despite further signs of weakness in China’s manufacturing sector, with both private and official activity surveys pointing to contraction last month.

(SD-Agencies)