By Sherry Qin and Jiahui Huang

Stock markets in Asia climbed on Monday after the U.S. and China agreed to suspend most tariffs the countries imposed on each other as trade negotiations continue.

The world's two largest economies agreed to lower "reciprocal" and retaliatory tariffs to 10% from 125% after the countries held "productive" trade talks over the weekend, U.S. officials said Monday. The U.S. tariffs related to fentanyl and other measures will remain.

Hong Kong's benchmark Hang Seng Index jumped on the news to end 3.0% higher, its biggest one-day percentage gain in more than two months. Technology stocks led the advance, with Apple supplier Sunny Optical Technology soaring 15% and the world's largest PC maker, Lenovo, surging 9.6%.

India's Sensex index was recently up 3.4% after opening higher, with the gains also coming as a fragile truce between New Delhi and Islamabad appeared to hold.

Other major Asian markets finished higher earlier Monday amid positive sentiment ahead of the U.S.-China announcement.

The Shanghai Composite Index climbed 0.8%, the Shenzhen Composite Index was 1.7% higher and the ChiNext Price Index increased 2.6%.

Japan's Nikkei Stock Average inched 0.4% higher, South Korea's Kospi rose 1.2% and Taiwan's Taiex added 1.0%.

Those gains came after U.S. and Chinese officials concluded the weekend's high-stakes trade talks, with Washington touting progress toward a deal and Beijing saying the two sides agreed to start a formal negotiation process.

Analysts described the outcome of the discussions as better than expected.

"While this is not a final solution, it is a good starting point for the two countries to negotiate a full range of issues, including but not limited to trade," Pinpoint chief economist Zhiwei Zhang said.

Zhaopeng Xing, senior China strategist at ANZ Research, said he expects the next step in negotiations to result in a bilateral standard for trade, before a final deal is reached within the next one to two years. A better-than-expected outcome to initial U.S.-China trade talks suggests that markets will likely correct recent pessimistic views of Chinese macroeconomic data, he said.

Write to Sherry Qin at sherry.qin@wsj.com and Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

May 12, 2025 04:47 ET (08:47 GMT)

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