Asian stocks higher after Trump's China tariff comments

Global stock markets rose on Friday, after US President Donald Trump's latest comments were seen as taking a softer stance towards tariffs against China and raised the prospect of lower US interest rates.

The yen, meanwhile, firmed after the Bank of Japan delivered a widely-expected rate hike.

Trump told business leaders at the World Economic Forum in Davos, Switzerland, on Thursday that he wanted to lower global oil prices, interest rates and taxes.

In an interview with Fox News on Thursday evening, Trump said his recent conversation with President Xi Jinping was friendly and he thought he could reach a trade deal with China.

"But we have one very big power over China, and that's tariffs, and they don't want them, and I'd rather not have to use it, but it's a tremendous power over China," he said.

Those comments sent China's CSI300 blue chip index up 0.8 per cent and Hong Kong's Hang Seng index two per cent higher. The Australian and New Zealand dollars, as well as the yuan, also rose.

Hong Kong's Hang Seng surged 1.86 per cent to 20,066.19, lifted by tech stocks like Tencent and Baidu.

Japanese markets surrendered early gains to end on a flat note as the Bank of Japan hiked the short-term rate target by 25 basis points as expected and new data showed core inflation rose last month at the fastest pace in 16 months.

The yen gained and bond yields rose as the central bank raised its interest rates to their highest since the 2008 global financial crisis, revised up its inflation guidance and signalled more increases to come if GDP and price growth hit forecasts.

"The hike may have been expected but, in what feels like the first time in a very long time, there were no major downgrades to their economic outlook," said Matt Simpson, a senior market analyst at City Index.

"This keeps the door open to another 25 basis point hike by the year-end, and rates to sit at a whopping 0.75 per cent."

The Nikkei and the broader Topix index both finished marginally lower at 39,931.98 and 2,751.04, respectively. Shares of Japanese car manufacturer Mitsubishi Motors plunged 6.9 per cent after reports emerged the company won't be a part of Honda Motor Co and Nissan Motor Co's plans to combine under a holding company.

European stocks also edged higher during early Friday trading, helped by personal goods stocks as well as Trump's comments, with the STOXX 600 up 0.3 per cent, Germany's DAX up 0.4 per cent and France's CAC 40 up 0.9 per cent on the day.

Euro zone businesses saw a modest return to growth at the start of the new year, PMI data showed.

Trump's comments on wanting lower interest rates on Thursday moved US markets, with the S&P 500 hitting a record high, although investors remained cautious about the president's next moves on trade and tariffs.

"No politician advocates for higher rates and he has always put himself out there as a low rates guy," said Prashant Newnaha, a senior Asia-Pacific rates strategist at TD Securities. "Expect the president to become more vocal and critical of the Fed."

Treasury yields have been on the rise as bond investors brace for eventual tariffs that may stoke inflation. The US 10-year Treasury yield was at 4.6398 per cent in European trading hours, below last week's 14-month high of 4.809 per cent.

Euro zone government bond yields edged higher, with the German benchmark 10-year yield at 2.549 per cent.

The European Central Bank and the Federal Reserve are due to meet next week as policymakers digest early moves of the Trump administration.

Currency markets in general have been tentative after a volatile few sessions since Trump's return to the White House, driven by his pronouncements on tariffs.

The US dollar index was at 107.47, down around 0.6 per cent on the day and set for a 1.8 per cent weekly loss - its biggest weekly loss in two months.

Oil prices remained well below $US80 a barrel, under pressure after Trump said he would be asking Saudi Arabia and OPEC to bring down oil prices.

Brent crude futures were a touch higher at $US78.54 a barrel. US West Texas Intermediate crude (WTI) was at $US74.83.

with DPA