By Marc Jones

LONDON, June 25 (Reuters) - Multi-billion dollar fund manager Franklin Templeton BEN.N has started edging back into Chinese stocks for the first time in years, betting that trade tensions with the U.S. have now peaked and that Beijing is fully behind its top tech firms again.

Zehrid Osmani, Head of the firm's Global Long-Term Unconstrained team, told Reuters that a group of its funds managing around $2 billion had only started their buying in the last few weeks having had no exposure at all over the last 2-3 years.

"We've tip-toed (in)," Osmani said in an interview. "We reduced our underweight which has been sizable in some of our mandates, and in some of our global mandates we've neutralized the China exposure."

Hong Kong-listed Chinese tech stocks .HSTECH are up nearly 20% this year, more than treble what the U.S. Nasdaq .NDX has made and flow data has shown global investors significantly increasing their buying.

Osmani said it had returned largely because after years of spluttering growth, property market and geo-political troubles, and a "Common Prosperity" mantra which crimped top tech firms, China's markets look cheap.

President Xi Jinping signalled an end to the tech clampdown by gathering the "captains of industry" earlier this year in a show of Beijing's support, while a willingness by both China and the U.S. to meet at the trade negotiating table was also encouraging, Osmani said.

"We're also conscious that China, in terms of policy initiatives, has probably more levers to pull than many other countries in terms of fiscal and monetary policy."

"We don't think they've gone aggressive in any of those, and we would like them to be more aggressive on both fronts to really support the economy, but they do have those levers that they can pull."

(Reporting by Marc Jones and Dhara RanasingheEditing by Tomasz Janowski)

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