China stocks ended higher on Tuesday in very thin trade as Beijing confirmed that it is still in trade talks with Washington, and as investors looked to market support from government policies aimed at countering slowing growth. At the close, the Shanghai Composite Index was 0.4 percent higher at 2,594.09 points. About 10.13 billion shares were traded on the Shanghai exchange, only about 57 percent of the market's 30-day moving average of 17.65 billion shares a day. The blue-chip CSI300 index rose 0.5 percent to 3,159.82 points, with its financial sector sub-index higher by 0.43 percent, the consumer staples sector up 0.87 percent, the real estate index up 2.75 percent and the healthcare sub-index up 1 percent.

The smaller Shenzhen index ended up 0.85 percent and the start-up board ChiNext Composite index was higher by 0.846 percent.

China and the United States discussed the road map for the next stage of their trade talks on Tuesday, during a telephone call between Chinese Vice Premier Liu He and US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer.

A Canadian provincial court weighing whether to grant bail to Huawei Technologies Co Ltd Chief Financial Officer Meng Wanzhou, who is facing possible extradition to the United States, adjourned on Monday without deciding her fate. Meng's arrest threatens to inflame an already tense China-US trade relationship.

In a note, analysts at Guodu Securities highlighted continued weakness in global risk appetite following Meng's arrest, as an inverted US yield curve points to a risk of recession, and as the risk of a no-deal Brexit increases.

The largest percentage gainers on the main Shanghai Composite index were Ningxia Xinri Hengli Steel Wire Rope Co Ltd, up 10.08 percent, followed by Veken Technology Co Ltd, gaining 10.05 percent, and Shaanxi Broadcast & TV Network Intermediary Group Co Ltd, up by 10.03 percent.

The largest percentage losers on the Shanghai index were Zhejiang Langdi Group Co Ltd, down 10 percent, followed by Jiangsu Kanion Pharmaceutical Co Ltd, losing 6 percent, and ShangHai ZhongYiDa Co Ltd, down by 5.24 percent.

So far this year, the Shanghai stock index and the CSI300 are both down 21.6 percent, while China's H-share index listed in Hong Kong is down 12.3 percent. Shanghai stocks have risen 0.23 percent this month.

Copyright Reuters, 2018